Slide 1: Investor Day, March 15, 2022
skillz | INVESTOR DAY “ein “@): MARCH 15, 2022
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Slide 3: Disclaimer
DISCLAIMER The information contained herein does not purport to be all-inclusive. The data contained herein is derived from various internal and external sources and is based on information available as of the date hereof. No representation is made as to the reasonableness of the assumptions made wi
Slide 4: Today's Agenda
TODAY’S AGENDA TIME (PACIFIC) TOPIC SPEAKER(S) 8:00a – 8:20a Strategic Vision Andrew Paradise, CEO 8:20a – 8:40a Product & Technology Vatsal Bhardwaj, CPO 8:40a – 9:00a Q&A Session #1 Management Team 9:00a – 9:15a Session Break George Petro, Play Mechanix 9:15a – 9:30a Developer Panel Tim O’Neil, Te
Slide 5: Strategic Vision
STRATEGIC VISION ANDREW PARADISE CHIEF EXECUTIVE OFFICER
Slide 6: Building the Competition Layer of the Internet
BUILDING THE COMPETITION LAYER OF THE INTERNET MARKET GLOBAL USERS (B) MARKET CHAMPION MARKET CAP ($B) Smartphones 3.5 $2,718 Social Networking 3.4 $566 Travel 1.4 $101 Ride Sharing 4.1 $67 Mobile Esports 1.0 $1 Note: Market cap refers to the market champion. Sourced from Yahoo! Finance as of 3/2/22
Slide 7: Mobile Gaming Is the First Target Market
MOBILE GAMING IS THE FIRST TARGET MARKET Mobile Gaming Market (2021) 2.8B 21% $93B Mobile Gamers worldwide (2021) 40% 79% Gamers want to compete Ads In-App purchase Source: Newzoo Games Market 2021 report, Udonis, and Frank N. Magid Associates. 7
Slide 8: History of Developer Adoption
HISTORY OF DEVELOPER ADOPTION MORE INHIBITORS TODAY IS FEWER INHIBITORS IN THE PAST MORE BALANCED IN THE FUTURE No access to No access to No access to the user data the user data the user data Limited ability to Limited ability to Greater ability to customize the interface customize the interface cu
Slide 9: Solving Developer Pain Points
SOLVING DEVELOPER PAIN POINTS DEVELOPER PAIN POINTS SKILLZ SOLUTION POOR HIGHER USER ENGAGEMENT MONETIZATION AND RETENTION NO PAYMENTS INTEGRATED PAYMENTS CAPABILITIES INFRASTRUCTURE AND SINGLE USER WALLET LIMITED PROPRIETARY PLAYER RATING, DATA ANALYTICS MATCHING AND FRAUD PROTECTION MANUALLY AUTOM
Slide 10: Expanding Our Lead Over Competitors
EXPANDING OUR LEAD OVER COMPETITORS CAPABILITY AD NETWORKS GAME DEVELOPERS TECH PLATFORMS ANALYTICS PAYMENTS LIVE OPERATIONS USER ACQUISITION CUSTOMER SUPPORT HOSTING AD NETWORK CONTENT DEVELOPER TOOLS EXIT GAMES PERCEIVED PRESENCE STRONG LIMITED NONE 10
Slide 11: Widening Data and Technology Moat
WIDENING DATA AND TECHNOLOGY MOAT 2.5B+ TOURNAMENTS Billions of annual Player rating 70%+ PLAYERS WIN tournaments and matching RATE IN-BAND 6.0M+ 70+ TRANSACTIONS AVERAGE DAILY Unique set of Anti-cheat PER SECOND TOURNAMENTS transaction / & anti-fraud user data 650B+ DATA POINTS Paid entry and Segme
Slide 12: Proven Scalability Without a Top Game, Yet
PROVEN SCALABILITY WITHOUT A TOP 10 GAME, YET PAYING MAU (M) NUMBER OF GAMES >$1M GMV Paying Monthly Active Users (PMAU) is the number of end-users who entered into a paid contest hosted on Skillz’s platform at least once in a month, averaged over each month in the period. Gross Marketplace Volume (
Slide 13: Building the Content Engine
BUILDING THE CONTENT ENGINE TOMORROW YESTERDAY TODAY 15M+ Ramp Sales GAME DEVELOPERS(1) 1. HIRE TEAM Build 2. DEVELOPER EDUCATION Marketing 3. OPTIMIZE PRODUCT Build Product 1M+ GAMES ON THE APP STORE(2) (1) Source: Unity Software Inc. S-1 dated 9/17/20. 13 (2) Source: Business of Apps dated 1/11/22
Slide 14: Why We'll Win
WHY WE’LL WIN $375K COST TO BUILD A GAME(1) $11K COST TO ACQUIRE A DEVELOPER $10M COST TO ACQUIRE A GAME(2) Note: $11k refers to cost of acquiring a developer who has signed and launched a game. (1) Based on the average range of $250k to $500k from Auroch Digital. (2) Based on selected mobile gaming
Slide 15: 2022 Plan: Path to Profitability
2022 PLAN: PATH TO PROFITABILITY THE PLAN THE IMPACT ⬝ GAAP Revenue grows slower than Revenue after Engagement Marketing (RAEM) ⬝ GAAP Revenue and RAEM grows faster than Marketing Increase Marketing Efficiency ⬝ RAEM grows faster than Revenue ⬝ Adj. EBITDA margin improves ⬝ GAAP Revenue and RAEM growi
Slide 16: Cloud Gaming: A Potential Game Changer
CLOUD GAMING: A POTENTIAL GAME CHANGER Revolutionize the playable ad Access Lower Increase to new friction to game audiences onboard discovery OUR END GAME Every Gamer, Every Developer and Every Type of Game on Skillz 16
Slide 17: Product & Technology
PRODUCT & TECHNOLOGY VATSAL BHARDWAJ CHIEF PRODUCT OFFICER
Slide 18: Comprehensive Platform Solution
COMPREHENSIVE PLATFORM SOLUTION Gamer Developer LiveOps Competition Console System Engine Network Data Science Technologies 18
Slide 19: Core Product Experience
CORE PRODUCT EXPERIENCE CURRENT STATE FUTURE STATE Unchanged since launch Poor tournament discovery Slower gameplay access 19
Slide 20: Social
SOCIAL PHASES OF SOCIAL GAMEPLAY EXAMPLE OF CHAT 3. More social gameplay features to come 2. Chat 3. Competition 20
Slide 21: Personalization and Data Science
PERSONALIZATION AND DATA SCIENCE RETENTION Example of Personalized Increasing spend, Push notifications, Player Matching LIMITED TIME OFFER CONVERSIONS Making first Deposit, Segmentation REGISTRATION Sign up/First few games ACQUISITION Ad Networks 21
Slide 22: Real-Time Multiplayer
REAL-TIME MULTIPLAYER MULTI PLAYER PVP TOMORROW TURN SYNC BASED BIG BUCK HUNTER ASYNC SYNC VS SKILLZ 2020 - POOL SKILLZ SOLO CIRCA 2016 - SOL CUBE PLAY PRE-SKILLZ FRAYHEM 22
Slide 23: Progression
PROGRESSION D Hyper customization C Custom Developer invests into progression with custom integration and developer tools Semi-customized B Game modes: Templates Tournaments App icons A STATIC INTEGRATION 23
Slide 24: Highly Scalable and Reliable Platform
HIGHLY SCALABLE AND RELIABLE PLATFORM 2.6x High Performance 70+ 99.95 %+ Transactions System Per Sec Uptime (2021) (2021) 24
Slide 25: Summary
SUMMARY ⬝ Comprehensive Go-To-Market Platform for game developers ⬝ User Interface Refresh on the core product experience increases LTV and trust ⬝ Social increases user engagement ⬝ Personalization increases user retention ⬝ Real-time Multiplayer Sync broadens the content on our platform and grows
Slide 26: Q&A Session #1
Q&A SESSION #1 skillz
Slide 27: Session Break
SESSION BREAK skillz
Slide 28: Developer Panel
DEVELOPER PANEL GEORGE PETRO TIM O’NEIL OWNER CO-FOUNDER & CEO
Slide 29: Distribution & Content
DISTRIBUTION & CONTENT CASEY CHAFKIN CHIEF REVENUE OFFICER
Slide 30: Large, Diverse Player Audience
LARGE, DIVERSE PLAYER AUDIENCE Source: Income demographics from Axciom survey data of paying users (2018). Gender and Age demographics from Skillz research. Amounts may not total due to rounding. 30
Slide 31: Reaching and Acquiring Users Efficiently
REACHING AND ACQUIRING USERS EFFICIENTLY Drive incremental revenue efficiently by acquiring and retaining users through diversified media investments and organic media channels DIVERSIFIED PAID MEDIA MIX REDUCE DSP FEES Deploy spend across highly programmatic Shift paid media spend to the and social ch
Slide 32: Driving Deeper Engagement on the Platform
DRIVING DEEPER ENGAGEMENT ON THE PLATFORM Optimize engagement marketing spend by focusing on high return programs, profit-margin accretive channels and player information OPTIMIZE ENGAGEMENT GROW PROPRIETARY PLAYER MARKETING SPEND COMMUNICATION CHANNELS PROFILES Improve the approach for evaluating In
Slide 33: Building the Brand
BUILDING THE BRAND Execute brand refresh to ensure a consistent and differentiated architecture, design and positioning while continuing to invest in partnerships to expand our footprint and deliver revenue for partners. BRAND BRAND AND IP REDESIGN PARTNERSHIPS 33
Slide 34: Growing the Developer Ecosystem
GROWING THE DEVELOPER ECOSYSTEM Optimize both the Managed and Self Serve functions BUILD COMMUNITY EMPOWER PRODUCTS & SERVICES Marketing To Lift Developers Through New Tools And Services Awareness And Interest Education & Insights To Give Developers More In Building With Skillz Control And Functiona
Slide 35: Summary
SUMMARY ⬝ We have a Large and Diverse audience of players ⬝ We are Optimizing UA via Data Science, automation, Aarki spend migration and organic traffic growth ⬝ We are Driving Deeper User Engagement with owned communication channels and more user data ⬝ We are Building our Brand which will enhance al
Slide 36: Financial KPIs
FINANCIAL KPIs IAN LEE CHIEF FINANCIAL OFFICER
Slide 37: Where We've Come From
WHERE WE’VE COME FROM 5 YEARS AGO $37B MOBILE GAMING MARKET SIZE 24K PAYING MAU(1) $8M REVENUE(2) to TODAY $93B MOBILE GAMING 611K PAYING MAU(1) $384M REVENUE(2) MARKET SIZE Source: Newzoo (1) pMAU figures are as of Q4 2016 and Q4 2021 respectively. (2) Revenue figures are for FY2016 and FY2021 respec
Slide 38: How We Generate Revenue
HOW WE GENERATE REVENUE Paying pMAU ARPPU RAEM Users Average # of Average Tournaments Entry Fee Gross Marketplace Revenue Volume End-user Incentives Prizes Reducing Revenue Engagement Marketing Developer Revenue Share Take Rate Incentives in Sales & Marketing 38
Slide 39: How the Business Model Works
HOW THE BUSINESS MODEL WORKS Business Model Note: All dollar amounts are illustrative and based on actual take-rate and margin structure and reflect rounding. Adjusted EBITDA is defined as EBITDA before non-recurring items and stock-based compensation (“SBC”). D&A means Depreciation and Amortization.
Slide 40: Pursuing Profitable Growth
PURSUING PROFITABLE GROWTH Revenue Revenue after Engagement Marketing $400 $324k $261k $148k $467k $288k $324k RAEM per Person Engagement Marketing as % of Revenue Adjusted EBITDA Margin % 39% -37% Note: All $ in millions, except for per person statistics. 2022E based on guidance provided by Company
Slide 41: Drivers of Path to Profitability
DRIVERS OF PATH TO PROFITABILITY ROI on UA Marketing(1) Key Drivers Grow User Retention or Engagement Improve UA Efficiency Improve Engagement Marketing Efficiency (1) ROI calculated based on cumulative gross profit after engagement marketing divided by UAC. 41
Slide 42: Growing User Retention or Engagement
GROWING USER RETENTION OR ENGAGEMENT Historical Quarterly Cohort LTV Key Driver is new user features Key Risks include product development and user adoption Key Upsides include new content Note: LTV calculated based on cumulative gross profit after engagement marketing. LTV shown on a per paying user
Slide 43: Improving User Acquisition Marketing Efficiency
IMPROVING USER ACQUISITION MARKETING EFFICIENCY CV-19 $ in millions Impact Key Driver 214% is optimizing current traffic sources and growing organic Key Risks include traffic quality from newer sources and media cost inflation 100% Key Upsides include better than expected price elasticity, Aarki performa
Slide 44: Improving User Acquisition Marketing Efficiency (Cont'd)
IMPROVING USER ACQUISITION MARKETING EFFICIENCY (CONT’D) UAC vs UA Spend “Sweet Spot” Of Spend Elasticity Example Initiative Targeting “sweet spot” of UAC vs Spend UAC UA Spend 44
Slide 45: Improving Engagement Marketing Efficiency
IMPROVING ENGAGEMENT MARKETING EFFICIENCY $ in millions Key Driver is identifying low return programs Key Risks include uncertain impact on longer-term user behavior Key Upsides include eliminating programs that may have been displacing user deposits 45
Slide 46: Improving Engagement Marketing Efficiency (Cont'd)
IMPROVING ENGAGEMENT MARKETING EFFICIENCY (CONT’D) Examples of engagement marketing initiatives Limited Time Trophies Limited Time Offers 0.4x 4.8x 7.3x 7.9x Implied ROI on Bonus Cash Note: The example initiatives that are shown indicate the Bonus Cash offered and the Gross Profit after Engagement Ma
Slide 47: Path to Break Even
PATH TO BREAK EVEN KEY KEY NEAR-TERM UPSIDE DRIVERS DRIVERS ⬝ Greater user acquisition ⬝ LTV growth driven by ⬝ New hit content ⬝ International expansion efficiency product initiatives ⬝ Take rate enhancement ⬝ Cloud gaming ⬝ Lower and more effective engagement marketing ⬝ Brand partnerships ⬝ Access
Slide 48: Summary
SUMMARY ⬝ We are Pioneering a new market ⬝ Profitable and Durable Growth is our focus ⬝ Path to Profitability driven by improving unit economics ⬝ Marketing Efficiency and New Products is our plan ⬝ New Content is Upside to full year 2022 revenue and RAEM guidance ⬝ 48
Slide 49: Q&A Session #2
Q&A SESSION #2 skillz
Slide 50: Closing Remarks
CLOSING REMARKS ANDREW PARADISE CHIEF EXECUTIVE OFFICER
Slide 51: Summary
SUMMARY ⬝ Building the Competition Layer of the Internet is our mission ⬝ We Serve the Massive, Rapidly Growing Market of mobile gaming ⬝ We Make Gaming Better for the Entire Ecosystem with an innovative solution for monetizing games ⬝ Adoption by Game Developers is Still Early with fewer inhibitors
Slide 52: Thank You
THANK YOU
Slide 53: Appendix: Reconciliation to Non-GAAP Items
APPENDIX: RECONCILIATION TO NON-GAAP ITEMS % OF % OF % OF ($ IN MILLIONS) 2021 2020 2019 REVENUE REVENUE REVENUE Net Loss ($181.4) (47.2%) ($145.5) (63.2%) ($23.6) (19.7%) Interest Expense, net 1.2 0.3% 1.3 0.6% 2.5 2.1% Change in fair value of common stock (87.9) (22.9%) 23.0 10.0% - - warrants lia
Slide 54: Appendix: Reconciliation to Non-GAAP Items
APPENDIX: RECONCILIATION TO NON-GAAP ITEMS ($ IN MILLIONS) 2021 2020 2019 Revenue $384.1 $230.1 $119.9 Sales and marketing - engagement marketing $187.6 $99.8 $51.4 Revenue after engagement marketing $196.5 $130.3 $68.5 Note: The Company defines and calculates RAEM based on the Company’s consolidated
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