Firy Inc. (SKLZ) Earnings Call Transcript & Summary

All right. Well, good afternoon, everyone. My name is Jason Bazinet. I'm Citi's Internet and media analyst. We're very fortunate to have Andrew Paradise, CEO of Skillz, with us today. Hello, Andrew.

Pleasure to be here.

We have disclosures available. You can reach out to the corporate access team or to me. And if you do want to ask a question to Mr. Paradise, you can just type it into the portal, and it will get forwarded to me. And I'm happy to ask it on your behalf.

So I guess if I can just start with a super easy one, which is, since you're a relatively new company to the public markets, maybe you can just start with just a brief overview of what Skillz does, and how you generate revenue? Just to level set for everyone.

Sure, happy to. So Skillz is a B2B2C technology platform that powers more than 2 billion tournaments per year. We enable game developers to monetize through competition. The platform broadly, it democratizes gaming by leveling the playing field for access to being able to build esports. We had this belief 9 years ago that esports are for everyone. And our goal is to make it as fair and as successful as possible to all constituents, starting with the game developers. So we enable developers of all sizes to monetize their art, while players are engaging in fair, fun and meaningful competition. When you think about the broader path ahead, we really view that we're building out the competition layer of the Internet. The business today, it's a transaction-based revenue model. We charge a entry fee into paid competitions on the platform. The average entry fee on the system, it's about $3 per player per tournament. So we generate about $0.90 of revenue on an average competition. So that equates to roughly a 15% take rate. The key is that we do this literally hundreds of times per second plus, going on thousands now, and we do it using a lot of automation and technology. As you can imagine, we don't -- we have I think our last public number is a little bit over 500 head count. And 2 billion tournaments, obviously, it's highly automated.

That's great. So what -- so you mentioned you started Skillz about 9 years ago. From that sort of starting point to where we are today, what would you say has gone better? And what has been more challenging than you expected when you first started this journey?

Well, we certainly believe the mobile gaming market -- well, we believe mobile would be really big. And that gaming interactive content at the time, there were 800 million smartphones and devices when we started the business. And almost 60% of the usage was mobile gaming on -- in terms of how the devices were being used. That number has actually stayed relatively constant as it scaled to 5 billion devices and tablets. So I'd say it's awesome to see that come to fruition. It is more powerful than we would have imagined, than I would have imagined. And the new projected number now, as we're sitting here in 2021, is that by 2025, there will be 10 billion smartphones and tablets. So more devices than people on the planet. I'd also say the performance of our platform versus in-game advertising -- we've never had to pivot because the rate of monetization from our platform versus this kind of next alternative of advertising. It's just -- it's such a stronger way to monetize [ in ads ]. And then I'd say in terms of going well, the level of talent and people who have been attracted to the mission, and how mission-driven they really are to see Skillz deliver the future of digital competition. As -- it's almost the same thing on the other side of the coin, if you think about challenges. We're 500 people going on 1,000, one of the biggest challenges, I think, for any important tech company now is to hire and onboard the best talent in the world. It is definitely a fight for talent. And at the rate our business has been growing, which is 2 to 4x in revenue each year. It's an increasingly large challenge to hire and retain the best talent. And we definitely saw this play out last year where we under invested in our revenue organization. And it resulted in us playing a bit of catch-up this year on user acquisition prices for the last several months. But we have a strong revenue team in place now, and we're continuing to add key talent, which I'd say in turn, is helping us build out the number of game developers on the platform faster than ever as well as their ability to launch successful games. And you can see that in terms of the content quality of this launching, I'll give you an example. Big Buck Hunter: Marksman launched with us earlier this year. I'd say it looks really promising. And just from a look and feel if you've tried the title, the graphics are very next gen for our platform.

Okay. That's super helpful. And what are the main priorities, let's say, over the next 3 to 5 years? Where -- what are you focused on?

So in the really long term, go beyond mobile, go beyond not -- gaming into non-gaming applications for competition, whether it's innovating against fitness, I think there are some really interesting early competition apps in fitness like Strava or in education, again, early apps like Duolingo. In the near term, it's optimizing our value chain. We recently acquired a advertising business called Aarki. And that actually -- it allows us to sniff the data on 5 trillion auctions every month, and to be able to build the data value chain from there all the way through to end-user LTV. So we are now capturing data at an even faster pace than we were before. If you think about prior to Aarki, we were capturing about 1.8 billion data points a day on user game play and behavior. Now we're capturing the 5 trillion auctions a month that we're participating in, and it's allowing us to tie all the way from when you see an ad through your eventual behavior on a product. So a really powerful thing, and will really help the game makers understand how to build better products over time as well as how to best monetize them. When you think about the last piece, the midterm, so kind of in between long and short, really thinking about building out more content. We recently made an investment in a business called Exit Games. That investment was focused around where we see the feature of content going on mobile and tablet, which is really around highly synchronous video game experiences. Think the kinds of experiences that we expect as commonplace right now on console and computer coming to mobile and tablet and becoming the majority of all play over time. So Battle Royale games, fighting games. 5G is going to deliver a much more synchronous world and a lower latency world, right? And that high throughput, low latency is going to allow for, I'd say, those experiences that used to come with being tethered to a desktop or to a TV to become kind of broken free and accessible everywhere. And so we want to be ready for that and there to enable our developers.

That makes sense. So one of the -- you mentioned you have very robust top line growth, I think you used the term doubling or quadrupling year-over-year. But one of the things investors focus on sort of at least in the near term has been the widening EBITDA losses, right, as you sort of spent money to get that growth. When do you think adjusted EBITDA losses will peak? Or when do you think will sort of glide towards something that's breakeven? Or is it not even really on your radar screen? I noticed you didn't mention it in the short, medium or long term in terms of your top priorities.

Well, the first thing I'd say is the way we think about user acquisition broadly is investing in profitable cohorts. So the way we work as a business is we aren't trying to buy just generic traffic onto the system. I think some investors have focused a lot on MAU in our business. It's not really the right metric because we -- frankly, if we could, we would only buy paying users. But it's really a pain now, and it's a metric that we talk a lot about. So when we think about buying a cohort of users, what we're trying to do is to predetermine at the impression level who will pay for the product and how much they'll pay before we win an auction. But -- and as such, we've been able to acquire better-than-industry average paybacks. So the gaming industry on mobile right now, it's broadly about an 18-month payback on acquiring customers. We're doing substantially better than that. Part of that is, as a reminder, our gross margin is 95% as a business. So we can be profitable today if we want to slow down our penetration of the massive market ahead of us. But when you think about our business, just like kind of thinking about Q2 of this year, our adjusted EBITDA margin before user acquisition was actually 17%. We just -- we believe that capturing the now $2.8 billion gamer opportunity in front of us by investing in growth with this discipline of understanding these paybacks, carefully monitoring cohort performance. And I would say we're only getting better at being able to predict from impression level through end-user payment, what that payback profile looks like. If you think about the longer-term margin profile of the business, we continue to target a long-term adjusted EBITDA of 30%, and we think we'll get there through a combination of increasing our take rate, which we've been able to do over time and also scaling out operations for greater efficiencies.

Okay. And that EBITDA margin target is including customer acquisition costs or marketing?

Yes. Yes. That's correct. That's correct. But I would say we're going right now from 5 billion devices to 10 billion devices until we level off on device growth. I don't think you want to approach a strategy. I mean right now, it's something of a land grab, right?

Right. Absolutely. So what -- I think one of your goals you talked about was diversifying that -- your revenues into more and more games and more and more genres. Do you think the level of concentration today poses a risk to investors? Or do you not really see that as a near-term risk, and you just sort of see risk moderating as the number of developers, the number of games becomes more diverse over time.

So -- it's interesting because if you were winding the clock to the first hit on the platform, revenue is concentrated basically 100% of 1 title of 1 studio, which I'd point out actually isn't a top 5 title today despite the title growing multiples over where it was when it was the top title. So what's been happening over the last 7, 8 years now since we started doing revenue. Is the titles aren't shrinking that were #1. They're actually growing often pretty substantially in revenue for when they were #1. They're just not keeping pace to the platform. I've been talking to some investors recently about Big Run and their game. Rewinding the clock to 2019, Big Run wasn't actually a customer on platform. In fact, the company didn't even exist. It was 5 veterans from Lucas, from Warner Bros., from Zynga, they quit their jobs, raised venture capital and the first title they built was Blackout Bingo. I think the reason sales has been so sticky with developers is because there's a very tight alignment for success. We are a rev share model. Once our -- the developers join our platform, they build out a hit like what Big Run has they often continue to invest. And actually, the way we think about it is it's not even title 1, but how -- if we don't get to at least 3 titles with the developer, we're not really successful with them. We want to see them continually invest and build the future of their business on Skillz. Big Run's a great example of that. They've launched Big Cooking, their cooking game, which is, a, it may sound strange to investors. Cooking is actually a very popular genre of video game on mobile right now. But they've -- their next piece of art that they brought to market, they brought it to market using Skillz, which I think says everything in and of itself that we'll really be a playbook for these businesses that are being built on top of us. When you actually look at retention of developers, it's nearly 100%. We've actually only ever had a handful of developers leave the platform. I think the last time we tracked the revenue that's left the platform was $19,000 of gross. And if you compare that to what we're expected to do this year, we're expecting to do about $2.5 billion of gross. So very small amount. I also would point out that our business seeks concentration. And what I mean by that is if you think about -- I'll take an analogy that investors are probably familiar with, if you think about Game of Thrones on HBO. When Game of Thrones was in its heyday, they were promoting it very heavily because they wanted to onboard customers onto the HBO network. Very similarly with Skillz, when you have -- whatever is your top piece of content, that piece of content is your best retaining, best engaging piece of content on your platform. It is, therefore, your easiest way to attract new customers and to cross-market them into other products. So very much like other industries. You want -- you seek to concentrate around whatever is the up-and-coming title of the day.

Okay. You recently announced Trivia Crack that's going to make a game exclusively for you guys. That seemed like a big deal to me given the firm's sort of track record and history. Can you just elaborate a little bit on that announcement? And what do you think it means both for your revenue growth and for revenue concentration, potentially?

Yes. And I'm glad that we're talking about it today because I certainly was surprised at how little pickup it got from the mainstream media. But well, I only say that because Trivia Crack is the #1 trivia franchise in the world. It's available in 180 countries in 34 languages. They have 150 million active users annually. It's a 9 -- what is it -- an 8-year-old game now. And so it has incredible staying power. We are working very closely with the team at etermax to build out the future of Trivia. I mean this is an opportunity for -- in the -- what may become Jeopardy of interactive entertainment, something that transcends 50 years. And as typical for games that we've yet to scale, we can't make predictions today on the potential revenue contribution from Trivia Crack. It's not baked into any of our numbers or forecasts that we've shared. But of course, it's super exciting, its potential. I mean the #1 trivia game in the world that it's a very -- at the very least, I think it's a signal to the market that important developers with important -- are willing to put their important IP on the platform.

Right. That makes sense. So maybe a quick question on sales and marketing. If you look at your P&L, almost all the costs are sales and marketing-driven, but there's a lot of component sort of embedded in there, right, user acquisition and user incentives, engagement marketing. How do you think about the appropriate mix of those elements of sales and marketing spend?

Sure. So the way we think about it, sales and marketing is primarily comprised of user acquisition and engagement marketing. So those are your 2 large buckets. They're almost half each of sales and marketing with a small minority in salaries. User acquisition marketing as we were talking about a minute ago, it's investment to acquire new users onto the platform. It is a key driver of our revenue growth today. And it's really -- think of it as payments to digital ad networks. We're very much focused on acquiring the users because we're so early in the market. And as we have a very strong balance sheet, we're looking to invest that balance sheet in what we refer to as high ROAS profiles. So return on ad spend, ROAS. So we really look at how quickly are we going to get paid back, and then what is our projected multiple of the capital we're deploying. On the other side, when you think about engagement marketing, it's investment really focused around the engagement and retention of the existing users on the platform. So how are we making use of these cohorts that are acquired? Right now, we're running hundreds of experiments in production on the existing player population. And quite a number of those experiments are how to out retain, out engage the existing population. We're going to continue to do that for the foreseeable future because we have a target of at least a 15% gain on one of our core metrics when we're running these types of experiments. These core metrics are retention, engagement, monetization and virality. We want to think carefully around how we can use engagement marketing and deploy those dollars to grow those metrics at a minimum every experiment targets over a 15% gain in one of those core 4 metrics. So when we stop having ideas that we really fundamentally believe can generate at least 15% gains on those metrics. I think you'll see us start to optimize down engagement marketing. But right now, there are -- there's a massive backlog. We're still, I'd say, very early in the optimization of this business. And the massive market ahead of us, we'd prefer to invest in user acquisition heavily to capture that opportunity out there. But I think what investors will see from us is we'll continue to exercise the discipline in any high UAC environment. So if you think about Q2 of '21, historically, Q2 has always been a worst quarter for us to acquire. The reason being we're over 90% revenue concentrated in the United States, and you're entering your summer months. Not surprisingly, that's not the best time to onboard users into new video games. And so we've seen this pattern every Q2 actually, where we dial back and stabilize UA from a pretty heavy growth spurt in Q1. This year was a little bit different because of the launch -- the new updates to IDFA and the changes in attribution, which created some disruption in the market, which I wouldn't anticipate we'll see again next year.

Okay. What -- how do you -- just out of curiosity, how do you measure virality of those 4 metrics that you gave? I could sort of sort of intuitively understand how you could measure the first 3, but how do you measure virality?

So yes, so there are 2 types of installs when we think about how we're tracking data. One is installs where we can directly attribute the source so we can directly tie it all the way back out to that impression. The other type of install is organic. And organic, the tracking obviously gets a lot more messy, and we're looking at a bunch of different things whether it's app store, search optimization or it's true word of mouth on a new game. So you're trying to influence, I would say, both people to do things like leave a great review on a product they like. That will help your virality or you're trying to influence a user to trying out different monitoring incentives to get a user to share it with a friend. You see that on many products, whether it's Uber or others, where you'll get $10 off a ride if you get a friend to take their first ride, things like that. There are a lot of different initiatives that you can do to influence organic installed growth.

Got it. Andrew, you mentioned earlier that you really care about paying users, not regular users. And you've seen sort of this pretty nice migration in that ratio of paying users to total users from high single digit, low double digit, to almost 20%, I think, in the second quarter. And you talked about getting that up to 40% in the long run. How have you achieved just the tactical improvements in the recent quarter, maybe it goes back to your staffing comment you made earlier? And what is it going to take to hit that sort of 40% target, in [ execution ] rate?

Well, so it's pretty interesting. When we've really driven this improvement in pair conversion through part being able to better target traffic that's more likely to pay, part more effective engagement marketing programs that foster higher engagement, higher retention. In fact, actually, it's an interesting thing. The longer a free user is on system before converting to paid, the higher their propensity to spend. So we actually, to some extent, if you can keep a user on system and then they convert at, say, 12 months into gameplay versus in their first month, which is the majority of users today. You're going to have a much higher LTV user over time. We're constantly running A/B tests on the platform. So hundreds of -- I think one of the things that we've been able to accomplish that many haven't is really sophisticated split testing on mobile, being able to run true split testing on hundreds of experiments at a given time is really powerful in mobile. And I've talked about our core metrics, but we're not just -- this isn't a pure human science of running these split tests. It's very much a machine learning and AI system that is driving optimization against human thought of experiments. So from an expectation standpoint, I would say reaching 40% conversion will take time. We do have games today that monetize much higher than our reported 19%. There are games on platforms that are monetizing at 35% payer. So we won't -- well, we -- I think we want to get to a place where we have the right content for the right demos. We have the right technology to be able to buy the right demo into the right game. So matching player to game, and then, of course, having the right on system settings to get those users to maximize. And those are -- there's a lot of pieces to the value chain here that were optimized.

Can I go back? Something you said it was exactly the opposite of what I thought was true. Did you say the longer a user is on your platform not paying, but they're engaged, the higher the LTV of that customer ultimately when they ultimately become a payer?

Yes. I did say that. Yes. So...

Wow. I thought -- yes, go ahead.

No. No. Think of it as the longer you practiced a given sport off-line, your higher likelihood of spending more money than a normal user on that sport over your lifetime. And that's one of the analogies we often -- I mean I think a lot of people don't understand that esports from a mindset and from a behavior pattern, it is very similar to off-line sports, if not identical. So I'll take a sport that I love. I love skiing. I started skiing when I was 2 years old. I'll probably ski until I'm in my 60s or 70s. So my LTV is going to be a 60-plus year LTV on that sport. And as I've gotten older, my -- I'd say, first of all, my love of skiing continues even though you end up spending more and more money on it over time with less and less skiing itself. So I'm doing less days of skiing with a much higher amount of spend per day. And you see the same type of behavior in esports.

I thought like if somebody was on your platform and just never opened up their wallet, right, that it would be very difficult to ever get them to open up your wallet, and you're just saying that's not true.

No. Yes, I'd say that's just not true.

Okay. Okay. Super interesting. So you touched on Aarki a little bit earlier. Can you just talk about when you made that acquisition, was that more focused on your top line or more focused on your customer acquisition costs? Or was it both?

Well, we really expect -- so when we acquired Aarki, it was -- there were multiple pieces of why we thought it was a great acquisition. I'll hit a few of them. But there are actually 6 reasons that we wanted to acquire the business. And for investors watching, I just want to remind everyone, so we expect Aarki to contribute $13 million of revenue for the remainder of this year before we're even talking about these synergies. It is going to take us several quarters to fully integrate Aarki and to realize all of the potential synergies. So let me talk about a few. One is, and probably the most obvious is migrating a portion of the 200 -- nearly $200 million of user acquisition we'll spend this year, migrating that over to the Aarki platform where we capture back all of the margin. Hopefully, that's kind of a no-brainer. It is still a lot of work. And you have to remember, we're being very dynamic when we look at those 5 trillion advertising auctions that we're participating in. If Aarki is the best route, we use Aarki, if it's not, then we go through others. Now that brings us to our second part, which is using both the proprietary data of Skillz plus Aarki's data. We can actually create a better data value chain from impression to end-user LTV than perhaps anyone in the world. That's going to both allow us to be more efficient on other auctions. So if we're winning a auction through another DSP that we use other than Aarki, it will allow us to be more efficient on those auctions. It will also allow us to build Aarki's business further for all of the auctions that other customers are using Aarki. So it both strengthens Aarki's business and Skillz' business. So it's really pretty wonderful there. The -- when we think about the financial impact, it's going to increase payer conversion, right? It's going to lower user acquisition costs. And we are going to be -- become a -- I'd say, a stronger business with even better moats over time from having this acquisition. So -- but we want our expectation set. It is definitely a 4- to 8-quarter. Integration is not something that investors should expect in quarter.

Is it easy to determine a priori how much of your $200 million in ad spend, you can run through Aarki without diminishing the efficacy of your UA? Or is that something that you sort of have to learn on the fly?

It's dynamic. So I will say that we reviewed a number of DSPs and advertising networks before purchasing Aarki. And we went with Aarki because we viewed it as the strongest product technology in the market.

Okay. Not just because it was a DSP without getting adulterated with the SSP side?

Correct.

Okay. And then am I right that the margins are sort of 20% to 25%? Is that the right way to think about, however, if you could get $1 and run it through Aarki, you'd save 20% or 25% of that vis-a-vis where you were prior to the acquisition?

20% to 30%.

20% to 30%. Okay. So what about LTV to CAC ratios? Is there anything you can share about how those trends have gone? How IDFA impacted it? How COVID impacted it? How your increased payer conversion rates influenced it? I'm sure there's a lot of variables in there that sort of go into that composite number, but anything you can share would be helpful.

How COVID has impacted acquisition?

Just LTV to CAC, like just in aggregate, if you roll everything all up and look at your business?

Sure. Yes. So we definitely -- we monitor the performance of the cohorts on the system very closely. As you know, investment in user acquisition marketing, it's highly discretionary. It's -- I mean we're literally running it, think of the buyers at Skillz, acting as traders. And so if we don't like what we're seeing in terms of trades, we dial down what we buy. We've had, I'd say, a lot of investors asked whether or not we've seen a post-COVID return to the outside. The quarterly engagement metrics for users on our system. It's been pretty consistent over the past couple of quarters. We actually -- we only -- when you think about mobile versus like console or computer gaming. The COVID bump really was for a couple of weeks in lockdown. It wasn't like these other forms of gaming, that long-form gaming. The mobile sessions, your user is going to -- they're going to do 5 sessions a day for 12 minutes. They're not doing one session for 90 minutes, which is obviously going to be much more heavily influenced by being able to work from home. In terms of LTV trends, I'd say, again, very consistent. One of the really interesting features of our cohorts is they tend to be very long lived. They generate positive returns over an extended number of years. In fact, when we think about buying and LTV over CAC, we focus on a 3-year horizon, and how much money we make, even though no paying cohort in the history of the business has ever stopped paying. So we've never had a paying cohort stop, at now 7 going on 8 years of paying. And so what you actually see as you look at those much older cohorts is you see an increasing multiple of LTV over CAC.

Even some of that like loses when you sort of go on the platform and engage, you say that again, you've never had a paying user stop paying you?

Paying a cohort, not a paying user. [ They will use ] -- yes. Yes.

A cohort? Okay. Sorry. Okay. Got it.

Yes. So of 100 users acquired, we've never had all 100 stop. In fact, the residuals are quite significant, and there are -- those residuals continue into perpetuity, and they do actually continue whether or not the users are winning or losing. So it's not like winning users sharing. It wouldn't really work. Yes. Actually, one of the things that's more interesting for me is your highest retaining cohorts are not the users that win the most. Yes, users that win the most actually are not -- winning over a certain level actually reduces retention. Strange.

Really?

Yes. You wouldn't think of that, would you?

What's your hypothesis for that?

I think it's boring. I think it's boring. I think even if you open this application and it pays you money every time you play, it's just not exciting. I think adrenaline is more important to humans than even money.

That's interesting. So what about the -- you've talked in the last couple of quarters about the fee -- the cost per installs being a little bit elevated. Can you just give your hypothesis for what was it that drove that? And then from that, maybe investors can draw their own inference about what those numbers could do, let's say, over the next year or 2?

Yes. And look, it's complicated. There are multiple factors. I'd say 2 things that I'd point to. One is ad networks pushing to optimize their pricing. And, two, the impact of the pandemic. And then maybe another piece is the change in IDFA, which I think is very much reverted to the norm, but certain networks that we buy from they were not as proficient as -- at navigating IDFA changes as others. And so that definitely impacts you, right? If you're -- if some of your traffic sources are all of a sudden less efficient because of IDFA. Now pretty much the whole industry has caught up now in IDFA. So I don't think that -- I think that's really a onetime event. When you think about Q2 of 2020 at the onset of the global pandemic, we actually -- we saw the really low cost for install as brand advertisers completely disappeared on the spend. Yes, absolutely. So it was like it was a record buying time. When the advertisers those same advertisers, though when they came back, they still had these ad budgets to deploy, and they're actually -- they needed to make up time on deployment, right? So the money really follows the eyeballs on mobile, and it drove CPIs to record levels. When we think about CPI reverting to the mean, we're really -- we're seeing the pace of industry pricing increases begin to stabilize. We're seeing -- we actually expect pricing will flatten before decreasing at least nominally later this year. And that decrease, we think, is going to be driven by the market dynamics as well as the results of the investments that we're undertaking to lower our distribution costs, whether it's Aarki, other traffic initiatives, new content on the platform, as well as things like brand distribution partnerships like we have with the NFL or new international markets. We've shared, I think, quite a number of times that we're going to be entering India.

Right. So can I talk about Exit for a bit? You made this $50 million investment in Exit, and you said it's going to accelerate your entry into synchronous games. What -- can you just talk a little bit more about what you're getting from the investment? And how important do you think synchronous games are to the future of Skillz?

Okay. Yes. Well, so the Exit investments, I would say, incredibly important, highly strategic and kind of one of a kind. So Exit is really the best multiplayer synchronous server technology in the world, their product Photon. So it was really exciting to be able to put that partnership together. What it does is it allows us to accelerate into the more hardcore gaming genres whether it's racing, fighting first-person shooter games by multiple years. So it's a multiple year time-to-market accelerant. And the alliance, it provides Skillz with platform exclusivity for Exit's technology. So our SDK will be integrated with their game engine. It will make it easier for developers to rapidly integrate their use for competition. We're actually planning out the technology integration now, and we'll communicate the time line with having the technical integration complete when we're ready. But it's possible that in a couple of years, the biggest game of the platform will be a multiplayer synchronous game running on top of Exit and Skillz. And think of that as maybe a Battle Royale, which is one of the most popular genres right now.

Okay. So -- as we move to this -- from this 4G world to 5G world where the latency is going to come down, and the device no longer is constrained by the processing power of that device. It's sort of all processed in the cloud. It makes a lot of sense to me that synchronous games open up and the games can get a lot more complicated than they are today, more immersive. But the one thing I just -- I don't understand maybe you can sort of unpack it is, can you just talk a little bit about the potential rollout? Like the first thing is the networks are all going to roll out some 5G service on some subset of their cell sites, right? And then consumers are going to get these 5G phones. And then is that it, you're sort of up and running? And how long do you think that takes before we sort of have a critical mass of true -- enough 5G network and enough 5G handsets to actually make a difference for Skillz and its entry into synchronous games?

Yes. So look, today, many gamers are already playing mobile games on WiFi. So it's -- I don't know about you, but I'm -- my phone, obviously, remembers my WiFi. When I get into get into my house, it automatically connects. So for that portion of the value chain, there is a difference. I do think one of the things for consumers is they have this expectation that their mobile experience is pretty ubiquitous. They're not like looking around their house like, "Oh, hey, I walked into my backyard, and my phone disconnected from my WiFi." They don't notice that. They just expect the experience to continue. So I think generally, having 5G deployed is going to make it a ubiquitous experience, like being on WiFi all the time. And it will enable this whole next genre of games to be not just played, but highly successful, right? And whether it's something like fighting. We actually -- we partnered with CAPCOM for Street Fighter several years ago. And CAPCOM and Skillz were unable to build the fidelity and experience that we -- that both companies wanted to launch. Because at the end of the day, a Street Fighter experience needs to feel right when you're pounding on the controls -- that the punches are landing in real time. It's very dynamic, and latency ruins the experience. And so not only is it bad for CAPCOM's brand, it's terrible for Skillz because at the end of the day, people aren't going to pay if they're not comfortable with how the content is performing. And the same is true with shooting. So I mean bullets, obviously, very real time, even faster than punches. So when we think about 5G, I'd say, there are quite a number of data sources out there that are public about the speed of rollout on the networks in a country like America where we're mostly -- most of our revenue comes from today. It's going to go networks and devices and then content shortly thereafter. The reason I'm by the way, I'd say content shortly thereafter is the game makers on our platform are already preparing for this stuff. So they're building to where they think that rollout is going to happen because the content makers they -- there's a lot of value in being early. And so when they're thinking about the timing, they're going to try and hit it as soon as it's available.

That's great. Well, thank you for that rundown. That was very -- adept answers to all of my questions. And I really appreciate it, Andrew. Super helpful.

All right. Well, thank you for having me, Jason. Is that everything? Or do we have some Q&A? Or where are we going now?

I think that's it. I didn't get any Q&A in the e-mail. So I was looking during the whole presentation. But if one comes up, I'll definitely shoot you guys an e-mail if we get any inbounds. So that's it.

Right. Appreciate the time. Thank you, everyone.

Yes, of course. Thank you. You're welcome.