Skillz Q2 2025 Earnings Report

Skillz EPS Results

• Actual EPS: -$1.12
• Consensus EPS: -$1.34
• Beat/Miss: Beat by +$0.22
• One Year Ago EPS: N/A

Skillz Revenue Results

• Actual Revenue: $27.37 million
• Expected Revenue: $22.80 million
• Beat/Miss: Beat by +$4.57 million
• YoY Revenue Growth: N/A

Skillz Announcement Details

• Quarter: Q2 2025
• Date: 8/7/2025
• Time: After Market Closes
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 4:30PM ET

Skillz (NYSE:SKLZ) operates a mobile game platform in the United States and internationally. The company primarily develops and supports a proprietary online-hosted technology platform that enables independent game developers to host tournaments and provide competitive gaming activity to end-users. The company distributes games through direct app download from its website, as well as through third-party platforms. Skillz Inc. was founded in 2012 and is based in San Francisco, California.

Skillz Q2 2025 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Skills disclosed delays in filing its 2024 Form 10-K and Q2 Form 10-Q, leading to an NYSE noncompliance notice and the need for extensions.
• Positive Sentiment: Q2 revenue reached $27 M, a 30% sequential increase (22% excl. one-time items) and paying MAUs grew 18% Q/Q to 146 K.
• Positive Sentiment: Adjusted EBITDA loss improved to $10 M, a 36% sequential and 17% year-over-year reduction, signaling progress toward profitability.
• Positive Sentiment: New platform features—including a revamped loyalty program, ACH deposits, and the Skills Arcade—were launched to boost engagement and monetization.
• Neutral Sentiment: Skills is pursuing litigation against Papaya and Voodoo for alleged bot usage, which it says is essential to restore trust and fair competition.

Presentation

[Operator]

Good afternoon, all. I'd like to welcome you all to the Skills Incorporated Second Quarter twenty twenty five Results Call. My name is Elliot, and I'll be moderating your call today. I'll now turn the conference call over to your host, Joe Jaffoni from JCIR to begin. Please go ahead.

[Joseph Jaffoni, Founder & President at JCIR]

This afternoon, Skills issued its twenty twenty five second quarter earnings release, 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 second quarter ended 06/30/2025. Accordingly, we are announcing preliminary results for the second quarter, which are based on currently available information and are subject to revision. Actual results may differ from these preliminary financial results and other financial information as final adjustments and developments may arise between now and the time the results are finalized. In the event the company determines it will not file its quarterly report on Form 10 Q by the prescribed deadline, it will file an extension on Form 12b-twenty five with Securities and Exchange Commission, which may include further disclosure.

[Joseph Jaffoni, Founder & President at JCIR]

The company is also completing the financial statements and other disclosures for the year ended 12/31/2024. We were unable to file our annual report on Form 10 ks for the year ended 12/31/2024, and we previously announced we received a notice from the NYSE that the company was not in compliance with its listing standards. The company is working diligently to complete the necessary work to file the Form 10 ks as soon as practicable and currently expects to file the Form 10 ks within the six month period granted by the NYSE notice. Additionally, the company intends to take the necessary steps to achieve compliance with the applicable NYSE listing standards as soon as practicable. Before I turn the call over to Skills' Founder and CEO, Andrew Paradise, please note that management's comments today may include forward looking statements within the meaning of federal securities laws.

[Joseph Jaffoni, Founder & President at JCIR]

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 condition. During the call, management will discuss non GAAP financial measures, which it believes 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.

[Joseph Jaffoni, Founder & President at JCIR]

The reconciliation of these measures to the most directly comparable GAAP measures is available in the company's second quarter twenty twenty five earnings release. With that, I'll turn the call over to Andrew for some opening remarks, followed by a review of the financial performance from Skill CFO, Gaetano Francheschi, before we open the call for questions. Andrew?

[Andrew Paradise, Founder, Director & CEO at Skillz]

Thank you, Joe, and good afternoon. I want to begin today's call by providing some key quarterly financial updates before turning to our fair play initiative and litigation updates. Q2 GAAP revenue was $27,000,000 up from $21,000,000 in Q1 twenty twenty five and $25,000,000 in Q2 twenty twenty four. Excluding onetime adjustments, revenue grew 22% quarter over quarter and 4% year over year. Q two paying MAU was 146,000, up from 124,000 in q one twenty twenty five and 122,000 in q two twenty twenty four, which is 18% growth quarter over quarter and 20% growth year over year.

[Andrew Paradise, Founder, Director & CEO at Skillz]

Q2 adjusted EBITDA loss of $10,000,000 better than a loss of $16,000,000 in Q1 twenty twenty five and a loss of $13,000,000 in Q2 twenty twenty four, which is an improvement of 36% quarter over quarter and 17% year over year. Taken together, these results reflect continued progress toward returning skills to consistent top line growth and positive adjusted EBITDA. Moving now on to the first of our four pillars. During the quarter, we made significant progress in enhancing our platform to improve player and developer engagement retention. When we discuss this pillar, we consider both short and long term innovation across our platform.

[Andrew Paradise, Founder, Director & CEO at Skillz]

That means improving our player experience and enhancing developer features while prioritizing projects that will support new content, which in the gaming industry can have a long timeline from development to market readiness. In the quarter, our product teams delivered several platform launches contributing to our quarterly sequential revenue growth. We enhanced our loyalty program in q two, marking one of the most significant platform changes in several years. We recalibrated rewards to incentivize players to become high value users without negatively impacting retention. The revamped program introduced tiered milestones, personalized incentives, and one of the largest monthly prize pools in mobile gaming.

[Andrew Paradise, Founder, Director & CEO at Skillz]

This initiative paired with improvements to our trophy system and live event experience are being well received by our players. Additionally, we introduced ACH deposit and instant withdrawal, positioning skills as a leader in withdrawal times while providing players with funding optionality. Our previous average withdrawal time line was a known pain point for some players. We listen to player feedback and implement a solution that makes us one of the fastest and safest platforms to transact within our category. We also launched the first version of our Skills Arcade, a single app experience that allows players to seamlessly switch between more than a dozen games.

[Andrew Paradise, Founder, Director & CEO at Skillz]

Our goal is to build one of the largest single apps for prize based competition with additional features to be layered in as we continue to improve the arcade experience. We previously discussed our long term focus on new content pipeline generation, including a three year commitment of $75,000,000 to support the developer accelerator program. This program aims to help defray costs for developers and encourage them to build their games for our platform as they work to create the next successful hit. Since announcing this in February, we've identified several opportunities to invest in a variety of genres. While there's still a lot of work to be done, we're encouraged to see some of the early deliverables from our product road map benefiting the player and developer experience.

[Andrew Paradise, Founder, Director & CEO at Skillz]

With respect to up leveling our organization, we continue to strengthen our global team. This includes key hires across our product, marketing, analytics, and operations teams that contributed to this quarter's results. For our third pillar, our go to market focus on user acquisition and monetization. This has been an area where we saw significant improvement with meaningful quarter over quarter growth in paying MAU. To highlight again, paying MAU or MAU for Q2 grew 18% versus Q1 with 146,000 PMO representing our highest level in seven quarters.

[Andrew Paradise, Founder, Director & CEO at Skillz]

The improvement in PMO is primarily driven by new platform launches and effective marketing to new and lapsed users. User acquisition spend in q two was lower than recent quarters while we increased the volume of new paying users. We will continue to optimize customer acquisition costs while strategically scaling traffic. We believe our improved marketing efficiency and execution on our product road map will continue to benefit our monetization efforts. On our progress to demonstrate a clear path to profitability.

[Andrew Paradise, Founder, Director & CEO at Skillz]

With the information just provided, we believe we're making the steady strides needed to achieve our goal of generating positive adjusted EBITDA. While we've talked in detail about the sequential growth of the platform business, I'd also like to highlight that our key's revenue growth is also accelerating. This AI powered ad tech business is continuing to innovate in the mobile marketing space, and we're pleased with the team's execution across their strategic initiatives. In the quarter, delivered two key innovations. On iOS, it rolled out scan for native privacy centric models that drive both acquisition and retention without IDFA, identifier for advertiser, reliance.

[Andrew Paradise, Founder, Director & CEO at Skillz]

On Android, Arky moved its top of funnel deep learning to graphics processing unit accelerated training on over 1,000,000,000 examples per day, enabling real time bid optimization at scale. These advances expand Arky's addressable market, sharpen ROAS for its customers, and strengthen the integration with skills competition platform. With both businesses growing revenue, we're pleased with the progress in q two. Turning to an update on our fair play initiative. As we discussed on previous calls, protecting players and preserving fair competition is core to our values.

[Andrew Paradise, Founder, Director & CEO at Skillz]

We continue to pursue litigation against Papaya and Voodoo Games for their alleged use of bots, a practice we believe undermines consumer trust and harms the entire industry. These two cases are ongoing in the Southern District Of New York, and Papaya and Blue will have to answer to US laws and US consumers they have, in our opinion, defrauded. With respect to our Papaya litigation, the court recently issued a public order that Papaya must unseal, and I'll quote from the order. One, its admission of its historical use of bots. And two, references to its executives' assertions of their rights against self incrimination under the fifth amendment, end quote.

[Andrew Paradise, Founder, Director & CEO at Skillz]

We believe the elimination of bot fraud is critical to protecting players and restoring trust in this industry that we pioneered. As the leading US based platform for fair, skill based competition, we're confident that a level playing field, one that does not include the use of bots, will benefit players and shareholders. I'll conclude my comments by reiterating our view that our current valuation gives no weight to the combined value of our operating platform and the progress we've made towards achieving our goals. As we continue to execute on our business strategy, we expect our unique platform to generate returns for our shareholders. And with that, I'll turn it over to Gaytano.

[Gaetano Franceschi, CFO at Skillz]

Thank you, Andrew, and good afternoon, everyone. Turning to the second quarter financial results. Revenue was $27,000,000 up 30% sequentially and up 8% year over year. Excluding onetime adjustments, revenue grew 22% sequentially and 4% year over year. Paying MAU of 146,000 was up 18% sequentially and up 20% year over year.

[Gaetano Franceschi, CFO at Skillz]

Our paid user conversion rate, which is paying MAU divided by MAU, was 19% in q one, up from 15% a year ago. Turning to costs and expenses. Research and development expenses were $5,000,000 up 13% year over year. Excluding stock based compensation, R and D expenses were 17% of Q2 revenue. Sales and marketing expenses were $18,000,000 down 16% year over year.

[Gaetano Franceschi, CFO at Skillz]

Excluding stock based compensation, sales and marketing expenses were 62% of Q2 revenue. Q2 UA marketing was $3,000,000 while Q2 engagement marketing was $9,000,000 General and administrative expenses were $8,000,000 Excluding stock based compensation and funds received as part of an insurance settlement in Q2, G and A expenses were 49% of Q2 revenue. Q2 net loss of $9,000,000 compares to a net income of $26,000,000 in the same quarter last year. Excluding an insurance recovery in Q2 and $46,000,000 in obvious settlements in the prior year, Q2 net loss improved by $3,000,000 year over year. Adjusted EBITDA loss in the second quarter was $10,000,000 up 36% sequentially and up 17% year over year.

[Gaetano Franceschi, CFO at Skillz]

Net cash used in operating activities for Q2 was $21,000,000 Excluding litigation settlements, insurance recovery and the semiannual debt payment, Q2 net cash used in operating activities was 8,000,000 We ended the second quarter with $239,000,000 of cash comprised of $229,000,000 in cash and cash equivalents and $10,000,000 in restricted cash. At the end of Q2, we had 129,700,000 of total principal due on our 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 back to the operator for the Q and A session.

[Operator]

Thank you. We'll pause briefly to allow questions to register. We have no questions at this time. So ladies and gentlemen, this concludes our Q and A and today's conference call. We'd like to thank you for your participation. You may now disconnect your

Participants

Executives

• Andrew Paradise, Founder, Director & CEO
• Gaetano Franceschi, CFO

Analysts

• Joseph Jaffoni, Founder & President at JCIR