Skillz Inc.

Good afternoon. Thank you for attending today's Skills Fourth Quarter 2022 Earnings Call. My name is Frances and I'll be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Taylor Giles.

Good afternoon, and welcome to the Skills fourth quarter and fiscal year 2022 earnings conference call. With me today are Andrew Paradise, Skills' CEO, Casey Cheskin, so Jason Roswig, President, and Alvin Lobo, CFO. Note, our full financial results were published earlier today and are available on our Investor Relations website. Before I turn the call over to Andrew, Please note that some of management's comments today will include forward-looking statements within the meaning of the federal securities laws. Forward-looking statements, which are usually identified by the use of words such as will, expect, should, or other similar phrases, are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on them. We refer you to the company's SEC filings for a more detailed discussion of the risks that could impact future operating results and financial conditions. During the call, management will discuss non-GAAP measures which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. The reconciliation of these measures to the most directly comparable gap measures is available in our fourth quarter and fiscal year 2022 earnings release. With that, I'll turn the call over to Andrew for some brief opening remarks before we open this up for questions.

Andrew? Good afternoon and thank you for joining. Let me turn now to giving you an update on the four pillars we laid out last quarter to return skills to growth and in 2024 to profitability. Our first pillar is enhancing our platform to improve customer and developer engagement and retention. We're focused on the core strengths that helped us grow the platform since skills first began. In the fourth quarter, we made solid progress on our product initiatives, including the following features for consumers and developers. For consumers, first, we added features designed to reduce player friction and increase deposits. Second, we released a new SDK to drive additional UA efficiency. And third, we released features for paying players to reduce player friction and generate an increase in ARPACU, or average revenue per paying user. For our developers, first we shipped Skills Brick Breaker to teach new developers how to use the Skills SDK and an in-Unity API simulator, reducing 90% of the development time spent waiting for builds. Second, we also launched Skills Unity Sidekick to shorten iteration time for developers. Let me now turn to our second pillar, which is up leveling our organization. Since August, when we finished the organizational restructuring, we've made significant progress in staffing the right people with the right backgrounds into the right roles. We're not yet fully staffed. However, we have strong conviction that we'll continue to hire talented and motivated individuals across the company. We're thankful to all of our skills employees for last year for their perseverance and enthusiasm to take our company forward in the middle of a challenging restructuring. Having covered all that, I'd like to welcome Alvin Lobo, who joined us as CFO just last month. Alvin comes with broad and deep experience in the gaming space with prior roles in public companies, including most recently as CFO of Score Media and Gaming through their successful sale to Penn Entertainment. He also held senior finance roles with Void Gaming and Wynn Resorts. Alvin will be partnering with Jason Roswig, who is now serving as Skills President, as well as with myself, to drive the strategic initiatives that we believe are necessary to move the company forward. We're very excited to welcome him. Moreover, as I told you last quarter, our CTO, Vasily Filippov, has made a big impact in a short time. He's now joined by Brendan Vanus, our new head of customer success, who joined us in January from Microsoft, where Brendan was the head of customer success for PlayFab, which is a white-label gaming infrastructure product at Microsoft. Brendan has joined us to work with our developer customer community to provide a direct pipeline of feedback, ensuring our R&D efforts are in lockstep with our customers' needs. Combined with the rest of the executive team, we're continuing the work we began last summer of returning skills to being a high performance product development culture. Next is our third pillar, which is improving our go-to-market. We're pleased that this quarter we improved our payback period, compounding on top of last quarter's improvement. We expect to scale marketing if we're able to continue to drive down payback periods. Additionally, we're enhancing the efficiency of our engagement marketing through higher frequency, lower cost engagement marketing efforts. Our new Tungsten native SDK is expected to reduce user acquisition costs further. We're improving customer retention through product and content acquisition improvements. All this combined, these wins are giving us confidence that we can deliver attractive returns for our developers. Our fourth pillar is straightforward, demonstrating a clear path to profitability. I will let Jason talk more about our numbers, but we'll share that we continue to make progress here and intend to continue to progress through 2023 as we thoughtfully consider each and every investment with the goal of positive adjusted EBITDA by the end of 2024. Before I turn the call to Jason, I want to acknowledge that 2022 was an incredibly challenging year as we failed to meet investor expectations. We recognize that we have to demonstrate our progress through the numbers. which we expect will take four to six quarters to fully turn. The new team is up to the challenge and will continue to update on milestones achieved as we move through the year, while being mindful not to overpromise. In the meantime, we have a strong balance sheet to support thoughtful investment as we work to return our business to growth. Jason? Thank you, Andrew.