LAS VEGAS, March 14, 2024-- Skillz Inc. (NYSE: SKLZ) (“Skillz” or the “Company”), the leading mobile games platform bringing fair competition to players worldwide, today reported financial results for the fourth quarter and fiscal year ended December 31, 2023.

•Revenue of $29.1 million

•Gross profit of $25.7 million

•Net loss of $20.8 million

•Adjusted EBITDA1 of $(12.3) million.

•Paying monthly active users (PMAU)2 of 137,000

•Average Revenue Per Paying Monthly Active User (ARPPU)3 of $70.3

•Total operating expenses of $48.3 million

•Revenue of $150.1 million

•Gross profit of $134.7 million

•Net loss of $106.7 million

•Adjusted EBITDA1 of $(70.1) million

•Paying monthly active users (PMAU)2 of 179,000

•Average Revenue Per Paying Monthly Active User (ARPPU)3 of $70.0

•Total operating expenses of $250.7 million

•Cash, cash equivalents, and marketable securities of $302.0 million as of December 31, 2023

•Total outstanding debt of $123.9 million as of December 31, 2023

“We made steady progress throughout 2023 with our strategic initiatives to position Skillz to deliver consistent top-line growth and positive Adjusted EBITDA,” said Andrew Paradise, Skillz’ CEO. “This progress includes improving user economics, which have benefitted from the introduction of new features that increase player engagement and monetization. In addition, the payback period on our customer acquisition costs exiting the year was significantly shorter than it was entering 2023 and it has continued to improve to-date in 2024. Importantly, after declines in our paying audience throughout 2023, we significantly slowed the decline in the beginning of 2024, and are tracking to a more stable audience. We are now beginning to transition our efforts toward scaling the business to generate future profitable growth. Our continued execution on our strategic initiatives puts Skillz on track to achieve our goal of generating positive Adjusted EBITDA on a run-rate basis by the fourth quarter of this year.”

Gaetano Franceschi, Skillz’ CFO, added, “We continue to demonstrate prudent management of the business as reflected in the quarterly sequential improvements in our Adjusted EBITDA loss for every quarter of 2023, with the fourth quarter loss being 41% less than in the first quarter. Our focus on managing operating expenses is similarly driving improvement in our quarterly operating cash burn and, combined with our strong cash position of more than $300 million at 2023 year-end, provides us with the flexibility to invest in our key initiatives such as new product features that provide our players with a better experience which in turn will create value for our shareholders.”

Skillz will host a live conference call at 4:30 p.m. ET today. To access the call, please register using the following link:https://www.netroadshow.com/events/login?show=81fbf945&confId=61498. After registering, an email will be sent, including dial-in details and a unique conference call access code and PIN required to join the live call. Access to the live audio webcast of the discussion in listen-only mode will also be available at investors.skillz.com

A replay of the webcast will be archived on the Company’s investor relations website. An audio replay of the conference call will be available through Thursday, March 21, 2024, and can be accessed by dialing (866) 813-9403 (US) or (929) 458-6194 (international) and entering the passcode 189136.

Skillz is the leading mobile games platform dedicated to bringing out the best in everyone through competition. The Skillz platform helps developers create multi-million dollar franchises by enabling social competition in their games. Leveraging its patented technology, Skillz hosts billions of casual eSports tournaments for millions of mobile players worldwide, with the goal of building the home of competition for all. Skillz has earned recognition as one of Fast Company’s Best Workplaces for Innovators, CNBC’s Disruptor 50, Forbes’ Next Billion-Dollar Startups, Fast Company’s Most Innovative Companies, and the number-one fastest-growing company in America on the Inc. 5000. www.skillz.com

In this press release, the Company includes Adjusted EBITDA, which is a non-GAAP performance measure that the Company uses to supplement its results presented in accordance with U.S. GAAP. The Company’s management believes Adjusted EBITDA is useful in evaluating its operating performance and is a similar measure reported by publicly-listed U.S. competitors, and regularly used by securities analysts, institutional investors, and other interested parties in analyzing operating performance and prospects. By providing this non-GAAP measure, the Company’s management intends to provide investors with a meaningful, consistent comparison of the Company’s profitability for the periods presented. Non-GAAP operating expense is also included in this press release, which is a non-GAAP financial measure. The Company’s management believes non-GAAP operating expense is useful to investors and analysts as a supplement to its financial information prepared in accordance with GAAP for analyzing operating performance and identifying operating trends in its business. The Company uses non-GAAP operating expense internally to facilitate period-to-period comparisons and analysis in order to make operating decisions. As required by the rules of the SEC, the Company has provided herein a reconciliation of Adjusted EBITDA and non-GAAP operating expense to the most directly comparable measures under GAAP. Adjusted EBITDA and non-GAAP operating expense are not intended to be substitutes for any U.S. GAAP financial measures and, as calculated, may not be comparable to other similarly titled financial measures of other companies in other industries or within the same industry.

The Company defines and calculates Adjusted EBITDA as net loss before interest expense, net; (benefit) or provision for income taxes; depreciation and amortization, and other income or expense, net; as further adjusted for stock-based compensation and other special items determined by management, including, but not limited to, change in fair value of common stock warrant liabilities, acquisition-related expenses, impairment charges, loss contingency accruals, restructuring charges and one-time nonrecurring expenses. The Company defines and calculates non-GAAP operating expense as GAAP operating expense adjusted for stock-based compensation, one-time transaction expenses and other special items determined by management, including, but not limited to acquisition-related expenses for transaction costs, certain loss contingency accruals and restructuring charges, as they are not indicative of business operations.

The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis as it is unable to provide a meaningful calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that would impact the most directly comparable forward-looking U.S. GAAP financial measures that have not yet occurred, are out of the Company’s control and/or cannot be reasonably predicted. Forward-looking non-GAAP financial measures provided without the most directly comparable U.S. GAAP financial measures may vary materially from the corresponding U.S. GAAP financial measures.

The Company is in the process of completing its financial statements and other disclosures for the fiscal year ended December 31, 2023. As a result, the Company will file an extension for the filing of our Annual Report on Form 10-K for the year ended December 31, 2023. Accordingly, we are announcing preliminary results for the year, which are based on currently available information and are subject to revision as management completes its internal review. Our independent registered public accounting firm has not finalized its review of these preliminary financial results or its audit of the financial statements for the year ended December 31, 2023. Actual results may differ from these preliminary financial results and other financial information due to the completion of our internal procedures, the audit of our financial statements, final adjustments and other developments that may arise between now and the time the results are finalized. Further disclosure is included in the Form 12b-25 filed with the Securities and Exchange Commission. We expect to file our Annual Report on Form 10-K for the year ended December 31, 2023 by March 29, 2024.

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. The Company’s actual results may differ from its expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward-looking statements.

These forward-looking statements involve significant risks and uncertainties that could cause the Company’s actual results to differ materially from those discussed in the forward-looking statements. Most of these factors are outside of the Company’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to, the ability of Skillz to: effectively compete in the global entertainment and gaming industries; attract and retain successful relationships with the third party developers who develop and update the games hosted on Skillz’ platform; drive brand awareness with end users; invest in growth and development of employees; comply with laws, regulations and expectations applicable to its business, including with respect to cybersecurity and corporate governance matters; mitigate the commercial, reputational and regulatory risks to our business; remediate during fiscal year 2024 certain non- fully remediated material weaknesses in our internal controls over financial reporting. Additional factors that may cause such differences include other risks and uncertainties indicated from time to time in the Company’s SEC filings, including those under “Risk Factors” therein, which are available on the SEC’s website at www.sec.gov. Additional information will be made available in other filings that the Company makes from time to time with the SEC. In addition, any forward-looking statements contained in this press release are based on assumptions that the Company believes to be reasonable as of this date. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

Investors: ir@skillz.com

or

James Leahy, Richard Land

(212) 835-8500 or sklz@jcir.com

Media: press@skillz.com

(1) For the twelve months ended December 31, 2022, amount includes stock-based compensation recognized for the cancellation of the Chief Executive Officer’s award of 805,977 performance share units granted on September 14, 2021 (the “CEO Performance Stock Units”).

(2) For the three and twelve months ended December 31, 2022, amount includes impairment of intangible assets related to the developed technology and customer relationships for our Aarki acquisition, goodwill, as well as impairment of lease right-of-use assets and other long-lived assets.

(3) For the twelve months ended December 31, 2022, amount includes employee termination benefits.

(4) For the twelve months ended December 31, 2022, amounts represent IPO bonuses for certain employees, net of amounts forfeited by terminated employees.

(5) For the three and twelve months ended December 31, 2023, amount includes impairment of one of our non-marketable investments.

(1) For the year ended December 31, 2022, amount includes employee termination benefits.

(2) For the year ended December 31, 2022, amount includes stock-based compensation recognized for the cancellation of the Chief Executive Officer’s award of 805,977 performance share units granted on September 14, 2021 (the “CEO Performance Stock Units”).

(3) For the year ended December 31, 2022, amounts represent IPO bonuses for certain employees, net of amounts forfeited by terminated employees.

(1) “GMV” or “Gross Marketplace Volume” means the total entry fees paid by users for contests hosted on Skillz’ platform. Total entry fees include entry fees paid by end-users using cash deposits, prior winnings from end-users’ accounts that have not been withdrawn, and end-user incentives used to enter paid entry fee contests.

(2) “Paying Monthly Active Users” or “PMAUs” means the number of end-users who entered into a paid contest hosted on Skillz’ platform at least once in a month, averaged over each month in the period.

(3) “Monthly Active Users” or “MAUs” means the number of playing end-users who entered into a paid or free contest hosted on Skillz’ platform at least once in a month, averaged over each month in the period.

(4) “Average GMV Per Paying Monthly Active User” means the average GMV in a given month divided by Paying MAUs in that month, averaged over the period.

(5) “Average GMV Per Monthly Active User” means the average GMV in a given month divided by MAUs in that month, averaged over the period.

(6) “Average Revenue Per Paying Monthly Active User” or “ARPPU” means the average revenue in a given month divided by Paying MAUs in that month, averaged over the period and does not include a deduction for end-user incentives that are included in sales and marketing expense.

(7) “Average Revenue Per Monthly Active User” or “ARPU” means the average revenue in a given month divided by MAUs in that month, averaged over the period and does not include a deduction for end-user incentives that are included in sales and marketing expense.

(8) Amount reflects the average end-user incentives included in sales and marketing expense in a given month divided by PMAUs in that month, averaged over the period.

(9) Amount reflects the average end-user incentives included in sales and marketing expense in a given month divided by MAUs in that month, averaged over the period.