SKLZ - NYSE

Good afternoon. I'd like to welcome you to the Skillz Inc. fourth quarter and full-year 2025 results call. I'll now turn the conference over to your host, Joe Jaffoni from JCIR to begin.

Thank you, operator, and good afternoon, everyone. Skillz has issued its 2025 fourth quarter and full-year earnings release, which is available on the company's investor relations website. Let me read the safe harbor language, and then we'll get right into the call. All statements and comments made by management during this conference call, other than statements of historical fact, may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Skillz cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during this call. For additional details on these risks and uncertainties, please see Skillz annual report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission and Skillz subsequent public filings with the SEC.

Skillz undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Thank you, Joe, and good afternoon. I'll begin today's call with an overview of our fourth quarter and full-year 2025 financial performance. For the fourth quarter of 2025, GAAP revenue was $30 million, up 11% from $27 million in the third quarter and up 67% from $18 million in the prior year period. Adjusted EBITDA loss was $10 million, compared to a loss of $12 million in the third quarter and a loss of $17 million in the prior year period. These results mark four consecutive quarters of sequential revenue growth and two consecutive quarters of year-over-year revenue growth. For the full-year 2025, GAAP revenue was $105 million, up from $93 million in 2024, which represented 13% year-over-year growth. Adjusted EBITDA loss was $51 million, compared to a loss of $61 million in 2024, which represented a 16% year-over-year improvement.

A key driver of 2025 was our AI ad tech segment, R

It also strengthens monetization capabilities through meta-game systems while leveraging the competition infrastructure and secure layer that power the Skillz platform. Turning to R

We recently strengthened our board of directors with the addition of Gary Vecchiarelli and Shannon Demus. Gary serves as President and Chief Financial Officer of CleanSpark and brings extensive public company finance, capital markets, and strategic planning experience supporting high-growth companies. Shannon serves as CFO of the Americas of Light & Wonder and brings deep financial leadership experience across global gaming and digital entertainment businesses. In addition, Jeff Shouger has joined the Skillz board advisory after serving as Chief Financial Officer of Niantic, where he helped scale the company through global expansion and strategic transactions, including its recent $3.5 billion sale to Scopely. Together, they add significant capital market expertise, gaming and platform operating experience, and financial discipline as we continue to scale the business and execute our strategies. As it relates to our third pillar, go-to-market strategy and monetization.

At Skillz, our focus remains on acquiring and retaining high-quality paying players while driving efficient monetization. Paying monthly active users or PMAU was 141,000, down 9% from 155,000 in the third quarter and up from 110,000 in the prior year period, which represented 28% year-over-year growth. For R

As we've discussed and disclosed previously, protecting players and preserving fair competition remain core to our values as the pioneers of the skill-based gaming category. We continue to pursue litigation against Papaya Gaming and Voodoo for their alleged use of bots, a practice we believe undermines consumer trust and harms the entire industry. We remain committed to our position as both the Papaya and Voodoo matters continue through the litigation process. Regarding Papaya, our trial is now set for April 13, 2026 in the Southern District of New York, and we look very much forward to our day in court. As a reminder, in connection with our 2024 settlement with AviaGames, our annual $7.5 million payment was received in Q1 of 2026. To date, a total of $65 million has been received from AviaGames.

The company expects to receive two additional payments of $7.5 million in each of March 2027 and March 2028. In closing, 2025 was a meaningful year of progress across the enterprise. We stabilized the business, strengthened our platform infrastructure, improved operating discipline, and preserved our balance sheet to support ongoing growth. Additionally, we continue to deliver sequential and year-over-year revenue growth and expanded the technology foundation of both our Skillz and R

With that, I'll turn over the call to Gaetano for a review of the financial results.

Thank you, Andrew. Our fourth quarter results highlight the benefits of disciplined execution and structural improvements across both the Skillz and R

Q4 2025 net loss of $18 million improved 27% year-over-year. Q4 adjusted EBITDA loss was $10 million, up from a loss of $12 million in Q3 2025 and up from a loss of $17 million in Q4 2024, which represented a 17% improvement quarter-over-quarter and 41% improvement year-over-year. Our balance sheet remains healthy, and we continue to manage capital prudently as we progress towards sustained profitability. We ended Q4 2025 with $195 million in cash and cash equivalents and $130 million of debt outstanding that is now classified as current. As the debt approaches maturity later this year, we continue to evaluate a range of strategic alternatives to optimize our capital structure.

We are driving the business forward with focus and discipline to deliver meaningful long-term value for our shareholders and look forward to updating you further on our progress in 2026. Operator, we're now ready to open the line for questions.

If you'd like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We'll pause here briefly as questions register. First question's from the line of Ed Alter with Jefferies. Your line is now open.

Hi, everyone. Thanks for the question. Would love to just dig into the skill side of the results and the paying MAUs and GMV. Looks like kind of the direction of growth from paying users versus GMV has kind of flipped versus the last couple of quarters where paying users were up a little bit and then GMV per payer was down a bit, and that kind of flipped in the fourth quarter. Would love to hear just your thoughts on kind of what changed here and is this kind of the trajectory going forward or how to think about that.

Hey, Ed. Thanks for the question. Yeah. As you recall, in Q4, we had one of our larger gaming developers leave the platform. So we had a little bit of a dip in our paying MAU. But you can see that we continue to increase on our GMV per paying MAU. Going forward, as we, you know, continue to drive better efficiencies in our UA, we're gonna rescale our UA spend and continue to grow also on our PMAU.

Okay, great. Yeah, I guess on the partner that you guys kind of was leaving the platform, you guys had disclosed that in your 10-K yesterday that they were 51% of revenue last year. How is the progress going in terms of kind of moving folks from those games into, I think you talked about some Skillz-branded versions of that content. Kind of would love to hear how that rollout's gone.

Yeah. We don't disclose, like, the transition for a variety of reasons. Basically, when the partner left the platform, there were some games that left immediately. The two larger games that are call it the majority, call it 80%+, are there, and we're in the process of transitioning to our own games.

Also, if I could just jump in, this is Andrew. Thank you for the question, Ed. The other thing that we saw in Q4 is we had a technical issue with some of our engagement and marketing technologies for our player base, and we've now addressed that. It's kind of. You're seeing both effects in the change in PMAU in Q4.

Okay, great. Appreciate it. Thanks.