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| Statement |
|---|
| Given our net cash position of approximately $210 million in quarter-over-quarter improvements of our operating cash burn, we have a significant runway to return our business to sustainable high-velocity profitable growth |
| Throughout the third quarter, we made continued progress on the four strategic pillars we laid out last year that we expect to return Skillz to generating consistent top line growth, cash flow |
| These four pillars are: first, enhancing our platform to improve customer and developer engagement and retention; second, upleveling our organization; third, improving our go-to-market efficiency; and forth, demonstrating a clear path to profitability |
| This will position Skillz as having well above the industry average payback period for companies in the mobile gaming market |
| With our improving cash burn rate, we have the flexibility to deploy capital to enhance shareholder value |
| As Andrew indicated, we are confident in our ability to continue to improve our payback period with the goal of achieving a best-in-class 6-month target |
| The Skillz Board, management team and the entire organization remains firmly dedicated to successfully executing on our four pillars and creating a strong foundation to create value for our shareholders |
| We've built a unique platform, and if we prioritize continuing to improve retention, while maintaining healthy user economics, we can generate significant returns for our shareholders |
| Beyond getting our developer community to launch more content, we're also improving the transparency and monitoring of games that are candidates under our Skillz publishing model |
| It's truly exciting to see the platform launching new, meaningful features for players |
| Jason will review the details of our Q3 results in a moment, but I'm encouraged by the progress we've achieved to become profitable |
| I hope it's evident that we're well aware that we have much work to do |
| Ultimately, we still have more work ahead to grow Skillz platform to generate consistent, profitable growth and enhance shareholder value |
| In this respect, we expect our upcoming move into our new Las Vegas headquarters will further enhance collaboration, productivity, and accountability across the organization |
| So over time, we've seen our mature -- more mature user economics improving despite lower -- despite overall lower users on the platform |
| And I'm pleased to share that the two new features accomplish this goal in Q3 |
| So that's the highest since we started turning around our business |
| In Q3, we continued to improve our cash management as our operating cash burn was $18.5 million, and our total cash burn, including onetime items came to approximately $21 million |
| It's absolutely critical for both players and developers that 100% of the industry meets the highest level of trust for consumers |
| We have been focusing on reducing customer acquisition costs and on growing LTV by improving our product experience to drive higher engagement |
| We're also making progress with transitioning away from our dependence on contract labor to full-time permanent employees that are committed to Skillz mission |
| Both of these errors resulted in an improvement in Q2 net loss of negative $22 million to negative $16.7 million |
| Moreover, in Q3, we launched our highest number of prize-enabled games since Q2 of last year |
| We've seen a reinvigorated content creation community building games again on the platform |
| As we discussed on our Q2 call, our product team is developing a new feature pipeline that is driving higher customer attention, engagement, and monetization |
| While we still have work to do, we've made measured progress with putting the right people in the right roles while bringing our newer employees fully up to speed with those strategic priorities |
| We'll tightly monitor the game-level economics by channel to ensure that every dollar spent generates an attractive return on investment |
| I'll begin with some of the highlights of our efforts to enhance our platform to improve customer and developer engagement and retention |
| On a GAAP basis, sales and marketing was 88% of Q3 revenue, up 1 basis point year-over-year and up 7 basis points quarter-over-quarter |
| As we finish improving user economics and transition to growing traffic as our top priority, we'll look to grow new titles beyond the existing core library |
| Statement |
|---|
| Revenue in the third quarter was $36.4 million, down 38% year-over-year and down 9.3% sequentially |
| Adjusted EBITDA in the quarter was negative $18.5 million |
| Adjusted EBITDA margin decreased by 4% from negative 47% in Q2 to negative 51% in Q3 |
| This provides me with cautious optimism that we're on pace to generate quarterly sequential top line growth in 2024 and achieve our goal of generating positive adjusted EBITDA on a run rate basis by the end of next year |
| Third quarter UA marketing was $6.2 million, a decrease of 66% year-over-year and a 21% decrease quarter-over-quarter |
| Absent our actions consumers who engage in skill-based games will continue to be deceived, and this industry would eventually lose the public's trust |
| Q3 Engagement Marketing was $16.9 million, down 28% year-over-year and in line with Q2 |
| Despite clear evidence to the contrary, AVAGames continues to publicly state that they do not eat bots and continues to entice consumers based on a false promise of fairness |
| First, we identified that an accrual related to professional services was incorrectly over accrued in Q2 |
| As an example, our traffic levels continue to lag where we want them to be |
| Net loss of $33.5 million decreased by $49.7 million year-over-year |
| Research and development expense was $7.9 million in the quarter, down 1% year-over-year |
| Our paid user conversion rate which is paying MAU divided by MAU was 16% in Q3, slightly down from 18% in Q2 due to prioritizing optimizing our platform over user acquisition in the prior quarter |
| A 14% year-over-year decrease and a 2% decrease quarter-over-quarter |
| Sales and marketing expense was $31.9 million, down 38% year-over-year, including $2.5 million of stock-based compensation |
| But as we see games that are running their own marketing budgets, that take rate would conceivably be lower |
| And then looking at the take rate, it looks like it's been dipping down the last couple of quarters |
| Our Q3 user acquisition cost was the lowest in 2020 |
| They're stealing money from players that don't know they're playing against the bot and believe they're playing against another human opponent |
| Second, we identified an error in how we reported stock-based compensation, resulting in a benefit of $4 million to our net loss |
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