sklz-20240331

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 March 31, 2024


☐			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

84-4478274

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

6625 Badura Ave

Las Vegas, Nevada

89118

(Address of principal executive offices)

(Zip Code)

(415) 762-0511

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	SKLZ	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 15, 2024, the registrant had outstanding 14,001,209 shares of Class A common stock and 3,430,063 shares of Class B common stock.

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SKILLZ INC.

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			Page

Note Regarding Forward Looking Statements			1

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)			1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			28
Item 3. Quantitative and Qualitative Disclosures About Market Risk			38
Item 4. Controls and Procedures			39

PART II - OTHER INFORMATION

Item 1. Legal Proceedings			42
Item 1A. Risk Factors			42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			42
Item 3. Defaults Upon Senior Securities			42
Item 4. Mine Safety Disclosures			42
Item 5. Other Information			42
Item 6. Exhibits			43
Signatures			44

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, about Skillz Inc. (“we,” “us,” “our,” or the “Company”) and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding guidance, our future results of operations or financial condition, business strategy and plans, user growth and engagement, product initiatives, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “going to,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. We caution you that the foregoing may not include all of the forward-looking statements made in this report.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. These forward-looking statements are subject to risks, uncertainties, and other factors described in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, as supplemented by our other Securities and Exchange Commission filings, including among other things:

•Our ability to attract and retain end-users, and do so in a cost-effective manner;

•Our ability to manage our growth effectively;

•Our ability to achieve profitability given our history of losses;

•Our reliance on our third-party developer partners to continue to offer a competitive experience in existing and new games on our platform;

•Risks related to the fact that a limited number of games account for a substantial portion of our revenue;

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•Our reliance on third-party service providers including cloud computing services, payment processors, and infrastructure service providers, and our ability to manage our relationships with such providers or lose access to such services;

•Our ability to maintain our brand and reputation;

•The competitiveness of the broader entertainment industry, and the potential that our existing and potential users may be attracted to competing forms of entertainment;

•Risk related to a variety of U.S. and foreign laws, which our business is subject to and which are subject to change and could adversely affect our business;

•Our ability to obtain, maintain, protect or enforce our intellectual property rights;

•Risks related to economic downturns and political and market conditions beyond our control;

•Risk related to the occurrence of a data breach or other failure of our cybersecurity;

•Failure to properly contain a global pandemic in a timely manner and any related impact on how we and our business partners are operating;

•Our ability to timely and effectively remediate the material weaknesses in our internal controls over financial reporting or additional material weaknesses or other deficiencies in the future; and

•Our ability to mitigate the commercial, reputational and regulatory risks to our business that may arise as a consequence of our need to restate our financial statements.

These statements are based on our historical performance and on our current plans, estimates and projections in light of information currently available to us, and therefore you should not place undue reliance on them. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Forward-looking statements made in this Quarterly Report on Form 10-Q speak only as of the date on which such statements are made, and we undertake no obligation to update them in light of new information or future events, except as required by law..

You should carefully consider the above factors, as well as the factors discussed in other risks described in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, as supplemented by our other Securities and Exchange Commission filings. The factors identified above should not be construed as an exhaustive list of factors that could affect our future results and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report on Form 10-Q. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. If any of these trends, risks or uncertainties actually occurs or continues, our business, revenue and financial results could be harmed, the trading price of our Class A common stock could decline and you could lose all or part of your investment.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SKILLZ INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except for number of shares and par value per share amounts)


	March 31,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	290,601	$	302,028
Restricted cash	10,000		10,000

Accounts receivable, net of allowance for credit losses of $64 and $49 as of March 31, 2024 and December 31, 2023, respectively	5,096		5,942
Prepaid expenses and other current assets	5,915		6,721
Total current assets	311,612		324,691
Property and equipment, net	14,821		14,549

Marketable securities, non-current	447		1,125
Non-marketable equity securities	52,768		52,768


Other non-current assets	2,703		2,693
Total assets	$	382,351	$	395,826
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	11,371	$	1,712

Operating lease liabilities, current	1,257		1,364

Other current liabilities	48,854		46,782
Total current liabilities	61,482		49,858
Operating lease liabilities, non-current	10,250		10,573
Common stock warrant liabilities, non-current	2		11
Long-term debt, net of current portion	124,345		123,935
Other non-current liabilities	716		960
Total liabilities	196,795		185,337
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock $0.0001 par value; 10.0 million shares authorized — 0 issued and outstanding as of March 31, 2024 and December 31, 2023	—		—
Common stock $0.0001 par value; 31.3 million shares authorized; Class A common stock – 25.0 million shares authorized; 18.1 million and 18.1 million shares issued; 14.6 million and 15.8 million outstanding as of March 31, 2024 and December 31, 2023, respectively; Class B common stock – 6.3 million shares authorized; 3.4 million shares issued and outstanding as of March 31, 2024 and December 31, 2023	1		1
Treasury stock at cost, 3.5 million and 2.3 million as of March 31, 2024 and December 31, 2023, respectively	(19,956)		(13,000)
Additional paid-in capital	1,206,703		1,197,963
Accumulated other comprehensive loss	(1)		(7)
Accumulated deficit	(1,001,191)		(974,468)
Total stockholders’ equity	185,556		210,489
Total liabilities and stockholders’ equity	$	382,351	$	395,826

See accompanying Notes to the Condensed Consolidated Financial Statements.

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SKILLZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited, in thousands, except for number of shares and per share amounts)


	Three Months Ended March 31,
	2024		2023
Revenue	$	25,235	$	44,383
Costs and expenses:
Cost of revenue	3,451		4,582
Research and development	4,624		8,881
Sales and marketing	20,994		34,918
General and administrative	23,037		28,070


Total costs and expenses	52,106		76,451
Loss from operations	(26,871)		(32,068)
Interest income (expense), net	112		(3,494)
Change in fair value of common stock warrant liabilities	9		(1)
Other income, net	65		39
Loss before income taxes	(26,685)		(35,524)
Provision for income taxes	38		69
Net loss	$	(26,723)	$	(35,593)
Net loss per share attributable to common stockholders:
Basic and diluted	$	(1.45)	$	(1.70)

Weighted average shares outstanding:
Basic and diluted	18,461,221		20,883,293


Other comprehensive income
Change in unrealized gain on available-for-sale investments, net of tax	6		997
Total other comprehensive income	6		997
Total comprehensive loss	$	(26,717)	$	(34,596)

See accompanying Notes to the Condensed Consolidated Financial Statements.

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SKILLZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands, except for number of shares)


	Common stock		Treasury Stock			Additional paid-in capital			Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ equity
		Shares	Amount		Shares			Amount
Balance at December 31, 2022		21,068,697	$	1	—	$	—		$	1,153,071	$	(1,563)	$	(873,108)	$	278,401
Issuance of common stock upon exercise of stock options and release of restricted stock units		61,124	—		—	—			33		—		—		33
Shares repurchased by the Company and held as treasury stock

SEC Form 10-Q filed by Skillz Inc.