Good afternoon, all. I would like to welcome you, all, to Skillz Inc. 2024 First Quarter Results Call. My name is Elliott, and I'll be your moderator for today's call. [Operator Instructions] I'd now like to pass the conference over to your host, Jim Leahy from JCIR, to begin. So Jim, please go ahead.

Good afternoon, and welcome to the Skillz 2024 First Quarter Earnings Conference Call. On the call today are Andrew Paradise, Skillz' Co-Founder and CEO; Casey Chafkin, Co-Founder and CFO; and Gaetano Franceschi, CFO. This afternoon, Skillz issued its earnings release reporting preliminary unaudited first quarter results, which is available on the company's Investor Relations website. The company is in the process of completing its unaudited interim financial statements and other disclosures for the fiscal quarter ended March 31, 2024. Accordingly, we are announcing preliminary results from the first quarter, 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. In the event the company determines it will not file its quarterly report on Form 10-Q by the prescribed deadline, that we'll file an extension on Form 12b-25 with the Securities and Exchange Commission. In addition, the company is still in the process of completing its financial statements and other disclosures for the fiscal year ended December 31, 2023. We were not able to file our Form 10-K during a requisite extension period. As a result, we previously announced we received the notice from NYSE that the company was not in compliance with NYSE listing standards. The company is working diligently to complete the necessary work to file the Form 10-K as soon as practicable and currently expects to file the Form 10-K within the 6-month period granted by the NYSE notice, and intends to take all necessary steps to achieve compliance with applicable NYSE listing standards as soon as practicable. Because the results for the quarter and last year are preliminary and still subject to review and audit by our independent registered public accounting firm, actual…

Before I review the progress we've made on our 4 strategic pillars, I want to share some comments on the significant strides we're making related to key litigation matters and our fair play initiative. As you know, our proprietary platform provides certainty that every player is fairly matched against another real player. That is the foundation of competition and a critical tenet of skill-based gaming. Unfortunately, companies such as AviaGames, and we believe Papaya Gaming, do not follow ethical fairness practices and utilize bots to deceive players, often matching consumers against bots instead of against real opponents. We previously reported that a jury awarded Skillz approximately $43 million in our patent infringement case against AviaGames. Subsequent to this jury award, Skillz and Big Run Studios entered into a settlement agreement with AviaGames for a total of $80 million, which is almost twice the jury award. We received the first cash payment of $50 million for the settlement as of the end of April. Beginning next year, Skillz will receive $7.5 million for licensing royalty payments annually for 4 years. Let me be absolutely clear. The settlement does not end our fight to eliminate bots that defraud consumers in our industry. The evidence that came out of the AviaGames trial shows what we believe is a willful pattern of deceit by AviaGames and its executives. AviaGames tried to mask the usage of bots in their internal documents by referring to them as cucumbers and guides. The evidence presented in court clearly showed the presence of bots in their code. In fact, the word bots and robots appeared thousands of times in Avia's documents. More specifically, the evidence revealed different types of bots created to lure players in and keep them playing and paying. Shark robot, comfort robot, induction robot and cash…

Thank you, Andrew, and good afternoon, everyone. First quarter revenue was $25 million, down 43% year-over-year and down 19% sequentially. Our paid user conversion rate, which is paying MAU divided by MAU, was 14% in Q1, slightly down from 15% in Q4 due to continued focus in the quarter on new user onboarding. As Andrew indicated, we are confident in our ability to continue to maintain our current payback period and begin to invest to grow sequentially. Turning to OpEx. Research and development expense was $5 million, down 48% year-over-year. On a GAAP basis, R&D was 18% of Q1 revenue. Sales and marketing expense was $21 million, down 40% year-over-year, including $2 million of stock-based compensation. On a GAAP basis, sales and marketing was 83% of Q1 revenue compared to 79% in the year ago quarter and 75% in Q4. Q1 UA marketing was $5.6 million, a decrease of 33% from Q1 of last year and a 3% decrease quarter-over-quarter, while Q1 engagement marketing was $8.9 million, down 50% from Q1 of last year and down 34% from Q4. General and administrative expense was $23 million, down $5 million or 18% year-over-year, inclusive of $6.6 million in stock-based compensation. On a GAAP basis, G&A was 91% of Q1 revenue. The net loss of $27 million compares to a net loss of $36 million in Q1 2023. The adjusted EBITDA loss in the first quarter was $18 million, a 15% improvement year-over-year. Adjusted EBITDA margin was negative 70% in Q1 2024 compared to negative 47% in Q1 2023. We continue to expect our cost structure will benefit this year from lower cost for items, including legal, audit and insurance fees as well as continued prudent management of our cost base. Additionally, interest expense will continue to decline year-over-year given the reduction in outstanding debt. We ended the first quarter with $301 million of cash, comprised of $291 million in cash and cash equivalents and $10 million in restricted cash. As Andrew noted earlier, this does not include the $50 million received from Avia at the end of April. At the end of Q1, we had $129.7 million of total outstanding debt. With our improving cash burn, we have the flexibility to deploy capital to enhance shareholder value. At this time, we'll turn the call to the operator for the Q&A session.

[Operator Instructions] Ladies and gentlemen, this concludes our Q&A and today's conference call. We'd like to thank you for your participation. You may now disconnect your lines.