SKLZ - Earnings call transcript Q3 2024

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Operator

Good afternoon all. I would like to welcome you all to the Skillz Inc. 2024 Third Quarter Results Call. My name is Nadia, and I'll be moderating your call today. I would now like to pass the conference call over to your host, Richard Land from JCIR to begin. ahead. go please Richard, Sir

Richard Land

Good afternoon, Earnings XXXX Quarter the welcome Call. to Conference Skillz Third and

On are Skillz call available Gaetano third the today results on Franceschi, CEO; Co-Founder quarter Relations CFO. and the and company's This website. which afternoon, release, issued Investor XXXX Andrew its is Paradise, Skillz'

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

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

will before by most which followed isolation quarter Gaetano the prepared the or performance. some with substitute discuss for not over reconciliation open accordance call GAAP discussion that, call in we available These I'll the the considered Andrew? During remarks, company's is operating measures A the a XXXX our our in comparable directly measure these third financial turn be release. With for for to for non-GAAP of performance measures financial earnings to company's GAAP. opening questions. of Andrew can call, it be as in the measures, in management should evaluating useful results believes a

Andrew Paradise

afternoon. good and Richard, you, Thank

ongoing play we're want made key against matters. initiative to making the in Before turning share X our progress fair to pillars, an and litigation our on I strides the update

players this active continue real with alarm in being similar have fair competition. be with to very skill all provide matched ensure consumers certainty gaming with they're of to companies sounding space that to We the

necessary line. on behind to industry the thrive regard, have money scenes survive make and consumers both in are as the this can this hard-earned public Our and efforts, sure real their

While for Games year, our deceive into such highlighted against that this using Papaya delivers believing Voodoo and of bots promise a conviction our than companies to real to strong opponents. players, platform players Gaming we've are on as they're proprietary fairness human competing AviaGames, more

In these are This fact, robots outcomes. results gameplay predetermined manipulation hard-earned to believe we their alters of these match players American defrauding platforms on facing advantage, of with billions dollars. players or

We Southern our fairness, Papaya lawsuits New of part York. well fight suits stakeholders. our to as and protect interest our District for filed we filed against in Games Games interest As these the of Voodoo of the as

consumers will like some American law discovery time by want refusing While American relevant are These come to want take regarding court exploit their to to highlight bots. turn behind of the ours these trial, to materials irony ongoing use lawsuits and but try I companies of to filings. over Papaya's recent companies hide to and foreign

they've defrauded. interest the against the mind. to consumers pioneered our U.S. of our laws that pursue industry We evidenced the protect stand additional to have we actions As shareholders to while ready Papaya, fairness to to answer to within case they rulings in keeping continue by judge's safeguard in this U.S. will

light, reached we're in TODAY bringing action covered to the and the from can We're and attention legal August, class did industry. Bloomberg great job bots matter in lawsuits, to end having regulatory actions both American Both an our billions take necessary stop authorities to the Gaming. is far staggering, a do quick lawsuits hope of listening Bloomberg the the Show in The our and amount defrauded authorities. our consumers In these including to continue that do incredible and to Papaya Americans. addition impact to of these and against to bring but We being the from this class we to consumers. ordinary attention continuing perpetrated to money are on being on to to dollars have the use calls. of bring monetary part of against lawsuits we public this individuals fraud devastating need filed of fraud bots AviaGames has action everything and regulatory

I do Skillz engage shareholders. ultimately of belief and company, in competing that of ready, bots. As a strongly safety against set provider use it's fraud, willing We're field which the consumer believe and will to other this CAC without a U.S.-based benefit all of benefit. the level fairly our industry, and we're deceptive our should we our this wants dramatically in players playing capable gaming any skill-based for leading change this since the should LTV bot practice to that of the company to that compete not does elimination and

performance QX. business the to in now Turning

users on consistent have to Skillz positive We pillars to continue growth our continue work and position. returning a In sheet top Paying we for strong to financial the months adjusted and EBITDA. for QX X our the to quarter, balance in line stabilize of the period slowest XXXX, are XXXX in of typically MAU compared QX as paying even year. XXX,XXX to continued quarter XXX,XXX with the summer

of 'XX, on goal initiatives right expense to on consistently QX We're Our get a QX positive our to execution OpEx, cautious with our basis. of management and year-over-year in excluding EBITDA EBITDA. continues and we're 'XX adjusted loss track optimism build again our QX in generating line onetime benefits, adjusted cost our sales the with improved applying that to

improve developer an now first retention. platform and and pillars, on key Turning X update to of the engagement to our our enhancing customer

third the new on products development. our and pipeline calls in focus progress. product The recent discussed have on ongoing placed several We've reflected we've quarter some

QX, we to pillar, teams product and continued Bangalore-based data up-leveling analytics Las our optimize organization. and In second and marketing, the development, Our Vegas scale our to resources.

and to reduce expensive remote Las reliance teams. work continue third-party our U.S.-based and Bangalore-based our the workforce also on by contractors We our with absorbed Vegas

now QX at our to XXXX UA need our to system-wide go since scale was with level pillar, market. as to third levels spend. UA optimizing QX QX remains our to in while at being to on facilitate X-month approaching focus continue growth and spend payback. we on lowest fairly stable Moving and We consistent

part margin plan keeps which spend and As increase the these pricing, better within the Aarki, to pricing through us transparency our provides Skillz of efforts, we with family.

continuing point XXXX. Finally, positive optimistic I'll our talk generating a pillar, to fourth execute demonstrating bit turnaround EBITDA. little steady We're path about goal strategies, And achieve the clear we our needed a in we'll this inflection on making our to of profitability. reach by remain to adjusted strides

to XXXX compared QX million QX to with EBITDA adjusted year-over-year loss million in improve $XX.X $XX.X Our continued loss XXXX. a of in

to negative bot expenses adjusted line loss and of with million related equivalents cash, restricted debt. in legal million ended QX adjusted XXXX, from companies, or cash million flow of outstanding for Excluding activities cash was $XXX a improved QX EBITDA to lawsuits operating EBITDA the We in $XX million. Cash against of $XXX with our would quarter. have $XX.X net

our we've We we conclude cash to us the reiterating with profitable our growth. view to combined the goals. return sheet, gradually confident growth our continue gives value which, the the shareholders. I'll comments position we're platform to company We're balance business made executing and for strategies provides the to that to our operating burn, by no towards operating profitable with improve sustainable to to our need strong monthly our runway progress that of return my our the weight achieving current right valuation and the

execute to our for on turnaround continue platform we shareholders. unique our we generate As initiatives, can our believe significant returns

over turn Gaetano. I'll it that, to With

Gaetano Franceschi

second I'll quarter afternoon, compared which start and good financial that Thank we our you, several late presentation our our financials there by everyone. filed each and XX-Qs, are were nonmaterial presentations geography. Andrew, of XX-K segment to XXXX to that prior our first in XXXX were now financial and breaking are in in The noting by August, our X and changes highlight. updates out

quarter to was $XX million, Revenue XX% year-over-year. financial the flat third and down sequentially Turning results.

Our conversion flat, XX% which is MAU QX, paid MAU XX% divided in down in from paying with user quarter-over-quarter. QX, MAU, by improved PMAU while rate, was

as current we investing turn system-wide indicated, payback maintain period we As that growth. are Andrew to confident our we can in

excluding QX Sales and in stock-based to of million cash third in improvement year-over-year. XX% revenue. Net to a and expense $XX Research QX Adjusted was At in ended end down million, year-over-year million was UA to shareholder to we'll XXXX. cash flexibility the the $XX million, while was With QX enhance million million, due stock-based was was have expense marketing XX% million. to the million, was cash We and deploy compared call time, equivalents session. was our marketing debt. the $XX of excluding of EBITDA year-over-year the excluding improving compensation we was Turning the revenue. impact restricted XX% turn in of a in was Q&A XX% cash. outstanding XX% of engagement in was of we OpEx. XXXX. General revenue. expense $XXX and compensation with XX% the XXXX and the administrative operator million compares $X of to on of of of negative QX loss total quarter $XXX and the XX% million and for back of QX $XX.X impact had marketing down QX, cash Adjusted million EBITDA $XXX value. At stock-based loss year-over-year million, $XX loss the principal margin negative net XX% comprised down burn, QX $XX capital QX compensation this and XX% impact development $XX $X of QX quarter

Operator

Our first Alter Ed Instructions] question Jefferies. of [Operator goes to

Edward Alter

maybe is for to X within to stable that? a a been churn Or platform. wanted little a on hear group love hear core kind that churn that's you is paying the core the -- on guys now Can like Just that? there a in have And quarters would dig the of the -- the to on core core MAUs in nicely Just speak players of you more within cohort? row. more

Gaetano Franceschi

Ed, yes, thanks...

Andrew Paradise

the question, for Ed. Thanks Sure.

Sorry, go ahead, Gaetano.

Gaetano Franceschi

no, ahead, No, go Andrew.

Sorry. same the Apologies. We're not room. in

Andrew Paradise

is so Sorry, we slowed a for acquisition. audio clearer. really -- down little We've that do the

stable pretty multiple spend, for you the So when flat at look now of quarters. we've amount marketing been and

So we're doing then work the users both and paying of of reactivation is retention around what on users. of most paying of

So And have you cohorts? want anything really you on channels. Gaetano, as just add system to channels do owned marketing well about as

Gaetano Franceschi

I answer. said No, I what the correct. think way that's Andrew Basically, would is

Edward Alter

the guys? there, kind you at about talked you walk top the end as priorities then for deploying And of capital of deployment can capital, through X Great. kind Yes. you

Gaetano Franceschi

can want to that if and you add. take I Yes, Andrew,

of focus areas I think definitely couple a to want that there's we on.

product to in First tools say that is platform, we invest area the and so and people so creating And our be for new second course, to then the to continue our efforts, to want and third of product of our say invest area content and scaling and and processes up I'd and in we improve will UA in people. continue development. developers. development, want UA better our I'd marketing is investment

Edward Alter

scale the what great then you to layer that the against? X-month going are on you And But payback, on that guys that hear scale, you you're that. are are success looking you factors guys Great. that spend? Obviously, approaching what as it's to the measure UA, as yourselves targets to are hit

Andrew Paradise

some a No, good this question. so running hitting payback. of X budget of the at that's year -- Yes. The and that actually level we've months been

all return the I turning to and first here in lot call anywhere we our the is But profiles, sure that back things been sense we down retention said if many can has are issues be scale. in product, I does around itself, the to of is with of that advertising strategy obviously, the cut have not think there's it's the attractive near until business, given do, -- months. one end targeting really we a the it, especially of XX XXXX. In in hard in pretty we we to had, marketing to we're industry think the the seeing want product breakage 'XX make XX

what we user it cut that can and we've down way, to a life acquisition of way way, fix continue level retention. would say of to I So optimize so support is kind

early the we're our the back scale line Bingo indicators about out probably retention way we well look dXX, to to top titles cohorts cautious known on with that in. platform. Blackout -- I think falling already it's retention in it acquisition. that are curves, It's the we'll right dXXX think in But of Solitaire As then categories improve user Cube and and is scale those

potentially functional new that other a as have are are investment content. The marketing as of We we content in seeing number titles smaller launches. that benefit again, is and engine content and new more actually well more from now

publishing could of potentially the share approaching doing can platform on of the that, where and so. these capture identifying may of And acquisition of piece the being into next that games who it's hit. scale about the course, then larger the user put which actually -- portion So company developer so to deals game a do is against developers are we have with funds that the budget rev a not

Edward Alter

Great. publisher point, any Yes. last pipeline? that have And new I you then that to guess make notable on call-outs and new game on seen

Andrew Paradise

We diving into we're kind yet of that. have, but I think don't

So we signs but definitely out nothing moment. specifically are shoots, for green seeing to this of point

Operator

Thank you.

have no This you Thank We today's now further concludes joining. questions. call. for

your lines. You may now disconnect

Skillz (SKLZ) 7 Nov 242024 Q3 Earnings call transcript