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Skillz Inc.

Skillz Inc.SKLZ決算レポート

NYSE · 情報技術 · コンピュータ処理及びデータ準備サービス

Skillz is an online mobile multiplayer video game competition platform that is integrated into a number of iOS and Android games. The Skillz platform helps developers create franchises by enabling social competition in their games. Skillz has over 14,000 game developers who launched a game integration on the platform. Skillz hosts billions of casual esports tournaments for millions of mobile players worldwide.

What changed in Skillz Inc.'s 10-K — 2024 vs 2025

Top changes in Skillz Inc.'s 2025 10-K

366 paragraphs added · 426 removed · 251 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Skillz was founded on strong ethical principles, and we have intentionally grown and continue to grow values-first – scaling our workforce, services, customer portfolio, and investment partners purposefully. To ensure our culture remains positive and strong, we conduct periodic engagement surveys to gain a better understanding of what is important to our employees.
Culture and Engagement Skillz was founded on strong ethical principles, and we have intentionally grown and continue to grow values-first – scaling our workforce, services, customer portfolio, and investment partners purposefully. To ensure our culture remains positive and strong, we conduct periodic engagement surveys to gain a better understanding of what is important to our employees.
Fair Play Our proprietary platform fairly matches real players against other real players, which we believe is a bedrock of competition, and a critical tenet of skill-based gaming. We believe there are competitors that may not be following similar ethical fairness practices and may utilize bots instead of matching their users against real human opponents.
Fair Play Our proprietary platform fairly matches real players against other real players, which we believe is a bedrock of competition, and a critical tenet of skill-based gaming. We believe there are competitors that may not be following similar fairness practices and may utilize bots instead of matching their users against real human opponents.
In 2024, following a jury verdict finding AviaGames willfully infringed one of Skillz’s patents, the Company entered into a settlement. We believe the evidence we made public at trial showed the competitor and their executives were using bots to build their business, which we believe deceives players and harms our company’s competitive position.
In 2024, following a jury verdict finding AviaGames, Inc. (“AviaGames”) willfully infringed one of Skillz’s patents, the Company entered into a settlement. We believe the evidence we made public at trial showed the competitor and their executives were using bots to build their business, which we believe deceives players and harms our company’s competitive position.
Winning this case was a milestone for the Company as we continue our quest to uphold fair play and protect players from what we believe is fraudulent inducement, misrepresentation and the theft of billions of player dollars. We intent to continue to pursue our right to take action to help stop dishonest practices.
Winning this case was a milestone for the Company as we continue our quest to uphold fair play and protect players from what we believe is fraudulent inducement, misrepresentation and the theft of billions of player dollars. We intend to continue to pursue our right to take action to help stop dishonest practices.
The customer support team responds to all user inquiries including support for game crashes, payment issues, and loyalty program inquiries. For the year ended December 31, 2024 , our customer support team achieved a high player customer satisfaction score (CSAT) for cash players. We have a robust VIP program that supports high value players.
The customer support team responds to all user inquiries including support for game crashes, payment issues, and loyalty program inquiries. For the year ended December 31, 2025 , our customer support team achieved a high player customer satisfaction score (CSAT) for cash players. We have a robust VIP program that supports high value players.
Additionally, we rely on independent contractors and temporary personnel to supplement our workforce from time to time. None of our employees are represented by a labor organization or are a party to any collective bargaining agreement with respect to their employment by us. Culture and Engagement.
Additionally, we rely on independent contractors and temporary personnel to supplement our workforce from time to time. None of our employees are represented by a labor organization or are a party to any collective bargaining agreement with respect to their employment by us.
We believe this entrepreneurial foundation positions Skillz well to identify and create future opportunities at the intersection of technology, gaming, and competition. Our Segments Skillz Our platform enables game developers to monetize their content through multi-player competition by integrating real-money tournaments, virtual prizes, and social competition features directly into their games.
We believe this entrepreneurial foundation positions Skillz well to identify and create future opportunities at the intersection of technology, gaming, and competition. 5 TABLE OF CONTENTS Our Segments Skillz Our platform enables game developers to monetize their content through multi-player competition by integrating real-money tournaments, virtual prizes, and social competition features directly into their games.
LiveOps in mobile games on our platform encompasses everything from generating new events to creating new and exciting tournament formats. 6 TABLE OF CONTENTS With our highly automated system, we are able to run LiveOps for the games on our platform with what we believe is a fraction of the resourcing required by a typical game developer.
LiveOps in mobile games on our platform encompasses everything from generating new events to creating new and exciting tournament formats. With our highly automated system, we are able to run LiveOps for the games on our platform with what we believe is a fraction of the resourcing required by a typical game developer.
Key features of our proprietary data science technologies include anti-cheat, anti-fraud, player rating and matching, and segmentation engine. We believe our technology capabilities are industry-leading and have helped to differentiate our product offerings and promote fair play. High personalization is an integral element to enhancing the gamer experience on our platform.
Key features of our proprietary data science technologies include anti-cheat, anti-fraud, player rating and matching, and a segmentation engine. We believe our technology capabilities are industry-leading and have helped to differentiate our product offerings and promote fair play. 7 TABLE OF CONTENTS High personalization is an integral element to enhancing the gamer experience on our platform.
Approximately 93% and 96% of Ticketz were issued as a result of customers participating in paid tournaments in the years ending December 31, 2024 and 2023, respectively. Our Customer Advocacy 10 TABLE OF CONTENTS We provide 24/7 support, VIP agents and trust and safety services to our players.
Approximately 73% and 93% of Ticketz were issued as a result of customers participating in paid tournaments in the years ending December 31, 2025 and 2024, respectively. 10 TABLE OF CONTENTS Our Customer Advocacy We provide 24/7 support, VIP agents and trust and safety services to our players.
Our goal is not to reduce competition, but rather to ensure that all organizations in our industry maintain the same level of commitment as we do provide a transparent and fair player experience. Skillz will continue to combat the deceptive misuse of bots until systemic fraud in our industry is eliminated. For additional information, refer to Note 10.
Our goal is not to reduce competition, but rather to ensure that all organizations in our industry maintain the same level of commitment as we do to provide a transparent and fair player experience. Skillz will continue to combat the deceptive misuse of bots until systemic fraud in our industry is eliminated.
The introduction of standardized game development platforms and universally known distribution platforms such as the AppStore, Google Play, and Galaxy Store have resulted in a flood of game content to the market. Meanwhile, traditional methods used by game developers to monetize their content (e.g., via 7 TABLE OF CONTENTS advertisements or in-game purchases) have not kept pace.
The introduction of standardized game development platforms and universally known distribution platforms such as the AppStore, Google Play, and Galaxy Store have resulted in a flood of game content to the market. Meanwhile, traditional methods used by game developers to monetize their content (e.g., primarily through advertisements or in-game purchases) have not kept pace.
At Skillz, we believe that every employee contributes to shaping the future of interactive entertainment. We are a multinational technology company with offices in Las Vegas, San Francisco and Bangalore, India, with 323 employees located across 12 countries as of December 31, 2024 . The success of our business is driven in large part by our highly skilled workforce.
At Skillz, we believe that every employee contributes to shaping the future of interactive entertainment. We are a multinational technology company with offices in Las Vegas, San Francisco and Bangalore, India, with 370 employees as of December 31, 2025. The success of our business is driven in large part by our highly skilled workforce.
Tickets earned through the loyalty rewards and awards programs can be redeemed in our in-app Ticketz Store for various prizes ranging from Skillz-branded apparel to luxury goods and vehicles. Primarily, our users convert Ticketz to bonus cash.
Ticketz earned through the loyalty rewards and awards programs can be redeemed in our in-app Ticketz Store for various prizes ranging from Skillz-branded apparel to luxury goods and vehicles.
As these businesses scale and as Skillz continues to execute on its path to profitability, we are focused on launching additional growth initiatives that leverage our proven capability to pioneer new markets. Our founder and CEO, Andrew Paradise, has a demonstrated history of innovation, including the mobile self-checkout industry and the mobile skill-gaming market.
As our businesses scale and we continue to execute on our path to profitability, we are focused on launching additional growth initiatives that leverage our proven capability to pioneer new markets. Our founder and Chief Executive Officer (“CEO”), Andrew Paradise, has a demonstrated history of innovation, including the mobile self-checkout industry and the mobile skill-gaming market.
As a component of our proprietary security systems, we use our robust data to analyze and build statistical maps to predict users’ probable next outcome. This probability modeling then enables us to statistically detect anomalies, which are escalated for further review and remediation, where needed.
As a component of our proprietary security systems, we use our robust data to analyze and build statistical maps to predict users’ probable next outcome. This probability modeling then enables us to statistically detect anomalies, which are escalated for further review and remediation, where needed. Our Developer Community Smartphones have made video games more accessible, portable, and social.
However, we may use some of the capital allocated to the Program to support other opportunities that our management determines will better support the effort to monetize our mobile game ecosystem.
However, we may use some of the capital allocated to the Program to support other opportunities that our management determines will better support the effort to monetize our mobile game ecosystem such as published and owned and operated game content.
As Skillz onboards new developers, Aarki powers game title growth through user acquisition and monetization, continuously enhancing its machine learning engine, which in turn delivers better outcomes for developers and greater efficiency for the Skillz platform.
As Skillz onboards new developers, RZR’s platform is designed to power game title growth through user acquisition and monetization, continuously enhancing its machine learning engine, which in turn delivers improved outcomes for developers and greater efficiency for the Skillz platform.
We believe the use of bots in skills-based games by certain of our competitors damaged overall player engagement and trust within the skill-based gaming market, which we continue to spend capital and resources to overcome. We believe Aarki, our advertising technology solution, coupled with our investment in Exit Games, a real-time multiplayer technology provider, provides healthy revenue diversification.
We believe the use of bots in skills-based games by certain of our competitors damaged overall player engagement and trust within the skill-based gaming market, which we continue to spend capital and resources to overcome.
Rating and matching users is a challenging technical problem, as the fastest match is the next user in line to play, while the fairest match (i.e., a theoretically perfectly matched skill rating) could take a much longer time to find.
Our gamer competition engine, the software development kit, (the “SDK”) contains hundreds of features, which allows for seamless over-the-air updates. Rating and matching users is a challenging technical problem, as the fastest match is the next user in line to play, while the fairest match (i.e., a theoretically perfectly matched skill rating) could take a much longer time to find.
Payment Infrastructure Our payments infrastructure that, we believe, is reliable and generates up uptime that meets or exceeds industry standards. We believe our technology capabilities are critical to building and maintaining trusted relationships with our developers and users. Data Science Our algorithms and machine learning technologies augment all facets of our platform.
Payment Infrastructure We offer a payments infrastructure that includes ACH instant and fast withdrawals. We believe our technology capabilities are critical to building and maintaining trusted relationships with our developers and players. Data Science Our algorithms and machine learning technologies augment all facets of our platform.
Player Matching : Automatically match players based on skill levels, ensuring fair and engaging gameplay experiences. Cross-Platform Support : The Skillz platform is compatible with Android, iOS, and some Unity-based games, allowing developers to reach a broad audience. Comprehensive Analytics : Developers have access to performance metrics, player insights, and revenue data through the Skillz dashboard.
Our platform capability highlights include: • Monetize Through Competitions : Developers may earn revenue by hosting skill-based competitions where players pay entry fees, and Skillz takes a percentage of the pool. • Player Matching : Automatically match players based on skill levels, ensuring fair and engaging gameplay experiences. • Cross-Platform Support : The Skillz platform is compatible with Android, iOS, and some Unity-based games, allowing developers to reach a broad audience. • Comprehensive Analytics : Developers have access to performance metrics, player insights, and revenue data through the Skillz dashboard. • Focus on Game Development : With Skillz managing tournaments, payments, and player matching, developers can focus on building their games’ core mechanics and experiences.
The Company’s Class A Common Stock began trading on a split-adjusted basis on the NYSE at market open on June 26, 2023. All share and per-share amounts have been retrospectively adjusted to reflect the impact of the reverse stock split. Our mailing address is 6625 Badura Ave, Las Vegas, NV 89118, and our telephone number is (415) 762-0511.
The Company’s Class A common stock began trading on a split-adjusted basis on the New York Stock Exchange (the “NYSE”) at market open on June 26, 2023. All share and per-share amounts have been retrospectively adjusted to reflect the impact of the reverse stock split.
This includes companies that provide video entertainment, music entertainment, social networking and other forms of leisure entertainment. The large companies in our ecosystem may play multiple roles, given the breadth of their businesses. 11 TABLE OF CONTENTS Our Intellectual Property Our business relies substantially on the creation, use and protection of intellectual property.
Our developers compete for end-users 11 TABLE OF CONTENTS with other forms of consumer discretionary entertainment that vie for the users’ time and disposable income. This includes companies that provide video entertainment, music entertainment, social networking and other forms of leisure entertainment. The large companies in our ecosystem may play multiple roles, given the breadth of their businesses.
We protect our intellectual property by relying on international, federal, state and common law rights. We control access to our proprietary technology by entering into confidentiality and invention assignment agreements with our employees and contractors. We actively seek patent protection covering our inventions and as of December 31, 2024 , we have 91 patents granted and 86 patents pending worldwide.
Our Intellectual Property Our business relies substantially on the creation, use and protection of intellectual property. We protect our intellectual property by relying on international, federal, state and common law rights. We control access to our proprietary technology by entering into confidentiality and invention assignment agreements with our employees and contractors.
Compliance We handle, collect, store, receive, transmit and otherwise process certain personal information of users and employees, and we are subject to federal, state and foreign laws related to the privacy and protection of such data, including the General Data Protection Regulation of the European Union (“GDPR”) and the California Consumer Privacy Act (“CCPA”).
Changes in current laws or regulations or the imposition of new laws and regulations in the U.S. or elsewhere regarding these activities may impede the growth of social game services and impair our business, financial condition or results of operations. 12 TABLE OF CONTENTS Compliance We handle, collect, store, receive, transmit and otherwise process certain personal information of users and employees, and we are subject to federal, state and foreign laws related to the privacy and protection of such data, including the General Data Protection Regulation of the European Union (“GDPR”) and the California Consumer Privacy Act (“CCPA”).
We believe that as a result of our values, we have been able to identify, attract, engage and retain great people. Our seven core values define who we are, who we would like to be, and how we make decisions: Building a World Class Team.
We believe that as a result of our values, we have been able to identify, attract, engage and retain great people.
In exchange for access to our multi-player platform and monetization services, Skillz and its developers share in the aggregate entry fees paid by end users. Our platform capability highlights include: Monetize Through Competitions : Developers may earn revenue by hosting skill-based competitions where players pay entry fees, and Skillz takes a percentage of the pool.
In exchange for access to our multi-player platform and monetization services, Skillz and its developers share in the aggregate entry fees paid by end users.
Commitments and Contingencies. 4 TABLE OF CONTENTS Our Focus and Strategy We continue to focus on our operations and positioning our business for renewed growth. We believe that both our platform and advertising businesses are improving in performance, and as a result, we believe we are equipped to transition from a period of turnaround to one focused on sustainable growth.
We believe that both our platform and advertising businesses are improving in performance, and as a result, we believe we are equipped to transition from a period of turnaround to one focused on sustainable growth. Our strategy centers on building a portfolio of high-integrity, data-driven digital businesses that extend our existing core technology and platform capabilities.
We use geofencing technology designed to restrict user access to paid entry fee contests to only those jurisdictions where video game contests of skill are permitted.
We have developed internal compliance programs in an effort to comply with legal and regulatory requirements for skill-based gaming and with respect to data privacy and security. We use geofencing technology designed to restrict user access to paid entry fee contests to only those jurisdictions where video game contests of skill are permitted.
Players earn loyalty currency, called Ticketz, every time they play a paid entry contest. The frequency and amount of entry fees determine the amount of Ticketz that are earned. Players can earn trophies as awards for performing certain actions or achieving milestones in games, for which they receive Ticketz or credits, to be used towards future paid-entry tournaments.
Players earn loyalty currency, called Ticketz, every time they play a paid entry contest. The frequency and amount of entry fees determine the amount of Ticketz that are earned.
Our Class A common stock is listed on the New York Stock Exchange (the “NYSE”) under the symbol “SKLZ.” Unless the context requires otherwise, the words “Skillz,” “we,” “Company,” “us” and “our” refer to Skillz Inc. and our wholly-owned subsidiaries. Available Information Our website is located at www.skillz.com, and our investor relations website is located at http://investors.skillz.com/.
Our mailing address is 6625 Badura Ave, Las Vegas, NV 89118, and our telephone number is (415) 762-0511. Our Class A common stock is listed on the NYSE under the symbol “SKLZ.” Unless the context requires otherwise, the words “Skillz,” “we,” “Company,” “us” and “our” refer to Skillz Inc. and our wholly-owned subsidiaries.
The scope of data privacy laws and regulations worldwide continues to evolve, and we anticipate that the number of data privacy laws and the scope of individual data privacy and protection rights will increase. 12 TABLE OF CONTENTS We have developed internal compliance programs in an effort to comply with legal and regulatory requirements for skill-based gaming and with respect to data privacy and security.
The scope of data privacy laws and regulations worldwide continues to evolve, and we anticipate that the number of data privacy laws and the scope of individual data privacy and protection rights will increase.
In addition, many employees at Skillz may be eligible for equity awards to share in the Company’s financial success. Our Competition We primarily compete with alternative monetization services for mobile game content. This includes platforms that facilitate in-app advertisements and purchases, and other skill based platforms.
Our Competition We primarily compete with alternative monetization services for mobile game content. This includes platforms that facilitate in-app advertisements and purchases, and other skill based platforms. We principally compete on a number of factors, including a robust technology toolset designed with the ability to convert, engage and retain users.
Gamer Competition Engine Our end-to-end technology platform enables mobile game developers to improve gameplay experiences and drive engagement, retention and revenue from their content. Our gamer competition engine, the software development kit, (the “SDK”) contains hundreds of features, which allows for seamless over-the-air updates.
We believe this dynamic generates significantly stronger monetization for our business compared to traditional mobile game monetization. 6 TABLE OF CONTENTS Gamer Competition Engine Our end-to-end technology platform enables mobile game developers to improve gameplay experiences and drive engagement, retention and revenue from their content.
At Skillz, we believe a team with diverse business and geographic backgrounds leads to greater innovation, performance and engagement, enabling differential business growth. We believe that hiring employees in countries that have significant talent in gaming and advertising technology is important as our business continues to evolve.
We believe that hiring employees in countries that have significant talent in gaming and advertising technology is important as our business continues to evolve. As such, we have opened an office in India to attract and retain top industry talent with experience in gaming and gaming platforms.
The more Skillz SDK-enabled developers use Aarki, the better Aarki’s machine learning engine becomes, which we believe in turn drives better outcomes for the developers and drives more spend on the Aarki platform. Our Platform Overview We continue to work towards evolving our multi-player competitive gaming platform and thereby expanding the gaming market.
For our developers, RZR enables monetization through user acquisition and re-targeting, which we believe drives growth. The more Skillz developers use RZR, the better RZR’s machine learning engine becomes, which we believe in turn drives better outcomes for the developers and drives more spend on the RZR platform.
Our technology platform aligns the interests of developers and gamers with respect to user monetization to reduce potential friction between these parties. Traditional mobile games utilize in-game advertisements or purchases, which we believe creates friction in the user experience, hurting engagement and retention.
Traditional mobile games utilize in-game advertisements or purchases, which we believe creates friction in the user experience, hurting engagement and retention. By monetizing user engagement primarily through prizes, we create an alternative for both developers and players of competitive games.
At the center of this long-term vision is Aarki’s strategic relationship with our Skillz platform. Together, we believe our Skillz platform and Aarki form an ecosystem in which content creation, audience, and performance continuously reinforce one another. For our developers, Aarki enables monetization through user acquisition and re-targeting that which we believe drives growth.
While historically focused on mobile gaming, RZR now serves a broader set of industries, including consumer applications, retail, food and beverage, and entertainment. At the center of this long-term vision is RZR’s strategic integration with our Skillz platform. Together, we believe our Skillz platform and RZR form an ecosystem in which content creation, audience, and performance continuously reinforce one another.
Paired with Aarki, our artificial intelligence (AI) advertising technology segment, Skillz operates a closed-loop ecosystem that combines content, audience, and performance into a unified growth engine. Aarki delivers advertising solutions that drive revenue growth for mobile app developers by leveraging billions of contextual bidding signals, proprietary machine learning, and behavioral models to engage audiences in a privacy-first world.
RZR delivers advertising solutions that drive revenue growth for brands and mobile apps by leveraging billions of contextual bidding signals, proprietary machine learning, and behavioral models to engage audiences in a privacy-first world. We are increasingly focused on expanding into emerging performance channels such as connected television, as well as enhancing cross-channel measurement and optimization 4 TABLE OF CONTENTS capabilities.
By monetizing user engagement primarily through prizes, we create an alternative for both developers and players of competitive games. With our system, the more gamers enjoy playing in contests for prizes and the longer they play, the more revenue we generate for developers. We believe this dynamic generates significantly stronger monetization for developers compared to traditional mobile game monetization.
With our system, the more gamers enjoy playing in contests for prizes and the longer they play, the more revenue we generate for our business.
We believe our employees should have the support they need to maintain a strong work/life balance, grow personally and professionally, and save for their future. While the philosophy around our benefits is the same worldwide, specific benefits vary regionally due to local regulations and preferences.
Compensation and Benefits We offer a compensation and benefits package with health and welfare programs for employees and family members. While the philosophy around our benefits is the same worldwide, specific benefits vary regionally due to local regulations and preferences. In addition, certain employees may be eligible for equity awards.
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Our strategy centers on building a portfolio of high-integrity, data-driven digital businesses that extend our existing core technology and platform capabilities.
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In March 2026, Aarki, our performance marketing platform business, rebranded as “RZR.” The rebrand reflects an evolution of the platform’s capabilities and market positioning and does not represent a change in ownership or legal structure. Paired with RZR (formerly Aarki), our AI-powered advertising technology segment, Skillz operates an ecosystem that combines content, audience, and performance into a unified growth engine.
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Focus on Game Development : With Skillz managing tournaments, payments, and player matching, developers can focus on building their games’ core mechanics and experiences. Aarki Aarki is an artificial intelligence (“AI”) company that delivers advertising solutions to drive revenue growth for mobile app developers.
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For additional information, refer to Note 9, Commitments and Contingencies , in Part II, Item 8 of this Annual Report. Our Focus and Strategy We continue to focus on our operations and positioning our business for renewed growth.
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Aarki enables brands to effectively engage audiences in a privacy-first world by using billions of contextual bidding signals coupled with proprietary machine learning and behavioral models. The Company works with advertisers globally and manages millions of mobile ad requests per second from over 10 billion devices.
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In addition to using its platform to partner with game developers, Skillz publishes select game titles, which are shared with the broader ecosystem. RZR (formerly Aarki) RZR is a performance marketing platform that enables advertisers to acquire, retain, and monetize users across mobile, connected television (“CTV”), and other digital channels.
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Aarki’s strategic plan includes becoming a full-funnel growth marketing platform, extending beyond mobile performance into connected TV (CTV), influencer marketing and other forms of media to service advertisers. We envision Aarki serving 5 TABLE OF CONTENTS advertisers across the entire customer journey—from awareness and engagement to conversion and retention—through a unified, AI-driven platform.
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The platform utilizes proprietary machine learning and neural network-based architecture to optimize campaigns across user acquisition, retargeting, and brand performance objectives within a unified system. The platform processes large-scale data inputs in real time and applies predictive models to optimize bidding, targeting, and campaign performance across channels.
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Our Developer Community The global video game market size was estimated at $221.2 billion in 2024 and is expected to grow at a compound annual growth rate (CAGR) of 6.5% from 2025 to 2033. Smartphones have also made video games more accessible, portable, and social.
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Skillz Platform Overview We continue to work towards evolving our multi-player competitive gaming platform and thereby expanding the gaming market. Our technology platform aligns the interests of developers and gamers with respect to user monetization to reduce potential friction between these parties.
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As such, we have opened an office in India to attract and retain top industry talent with experience in gaming and gaming platforms. Competitive Compensation and Benefits. Skillz offers industry competitive wages and benefits. We also offer our employees a holistic benefits package, with premier health and welfare programs for employees and family members.
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Players can earn trophies as awards for performing certain actions or achieving milestones in games, for which they receive Ticketz or credits in the form of promotional incentive that cannot be withdrawn and may only be used by end-users to enter paid-entry fee contests (“Bonus Cash”). Primarily, our users convert Ticketz to Bonus Cash.
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We principally compete on a number of factors, including a robust technology toolset designed with the ability to convert, engage and retain users. Our developers compete for end-users with other forms of consumer discretionary entertainment that vie for the users’ time and disposable income.
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Our seven core values define who we are, who we would like to be, and how we make decisions: Building a World Class Team At Skillz, we believe a team with diverse business and geographic backgrounds leads to greater innovation, performance and engagement, enabling differential business growth.
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As of December 31, 2024, we enabled cash prizes in 45 states and the District of Columbia. Skillz enables cash prizes in all states except for Arkansas, Connecticut, Delaware, Louisiana and South Dakota.
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We actively pursue a strategic patent program designed to protect key aspects of our platform, technology and business model, as well as to support our competitive positioning within the skill-based gaming and real-money gaming industries.
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Changes in current laws or regulations or the imposition of new laws and regulations in the U.S. or elsewhere regarding these activities may impede the growth of social game services and impair our business, financial condition or results of operations.
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Our patent portfolio is focused on multiple categories of innovation, including, but not limited to: (i) core platform infrastructure and system architecture; (ii) tournament and competition formats, including matchmaking, scoring and anti-fraud mechanisms; (iii) payment processing, wallet functionality and real-money gaming systems; (iv) data analytics, machine learning and personalization technologies; and (v) user interface and gameplay optimization features.
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Our strategy includes both defensive and offensive objectives, including protecting our proprietary innovations, deterring potential infringement and, where appropriate, enabling licensing opportunities. We actively seek patent protection converging our inventions and as of December 31, 2025, we have 90 patents granted and 112 patents pending worldwide.
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Available Information Our website is located at www.skillz.com, and our investor relations website is located at http://investors.skillz.com/.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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For example, in July 2025, the U.S Congress enacted the One Big Beautiful Bill Act (“OBBBA”) which includes significant provisions, including tax cut extensions and modifications to the international tax framework. While Skillz continues to evaluate the impact of these legislative changes as additional guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions.
For example, in July 2025, the U.S Congress enacted the One Big Beautiful Bill Act, which includes significant provisions, including tax cut extensions and modifications to the international tax framework. While Skillz continues to evaluate the impact of these legislative changes as additional guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions.
In February 2024, we and Big Run Studios, Inc. (“Big Run”) brought suit against AviaGames, Inc. (“AviaGames”) for false advertising, copyright infringement, and violations of California’s state unfair competition law in relation to AviaGames’ use of bots on its platform. We are currently involved in other ongoing litigation with other defendants in relation to similar claims related to bot misuse.
In February 2024, we and Big Run Studios, Inc. (“Big Run”) brought suit against AviaGames for false advertising, copyright infringement, and violations of California’s state unfair competition law in relation to AviaGames’ use of bots on its platform. We are currently involved in other ongoing litigation with other defendants in relation to similar claims related to bot misuse.
The market price of our Class A common stock has been and may continue to be subject to wide fluctuations in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition and operating results; • changes in projected operational and financial results; • changes in laws or regulations applicable to our offerings; • the commencement or conclusion of legal proceedings that involve us; • actual or anticipated changes in our growth rate relative to our competitors; • announcements of new offerings by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments; • additions or departures of key personnel; • issuance of new or updated research or reports by securities analysts; • the use by investors or analysts of third-party data regarding our business that may not reflect our financial performance; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • sales of our Class A common stock; 38 TABLE OF CONTENTS • repurchases of our Class A common stock, including both repurchases as part of publicly announced programs and outside of such programs; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • impact of the recent elections in the United States; and • general economic and global market conditions.
The market price of our Class A common stock has been and may continue to be subject to wide fluctuations in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition and operating results; • changes in projected operational and financial results; • changes in laws or regulations applicable to our offerings; • the commencement or conclusion of legal proceedings that involve us; • actual or anticipated changes in our growth rate relative to our competitors; • announcements of new offerings by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments; • additions or departures of key personnel; • issuance of new or updated research or reports by securities analysts; • the use by investors or analysts of third-party data regarding our business that may not reflect our financial performance; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • sales of our Class A common stock; • repurchases of our Class A common stock, including both repurchases as part of publicly announced programs and outside of such programs; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • impact of the recent elections in the United States; and • general economic and global market conditions.
Challenges and risks from such investments and acquisitions include: • negative effects on business initiatives and strategies from the changes and potential disruption that may follow the acquisition; • diversion of our management’s attention; • declining employee morale and retention issues resulting from changes in compensation, or changes in management, reporting relationships, or future prospects; • the need to integrate the operations, systems, technologies, products and personnel of each acquired company, the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise in connection with integration; • the difficulty in determining the appropriate purchase price of acquired companies may lead to the overpayment for certain acquisitions and the potential impairment of intangible assets and goodwill acquired in the acquisitions; • the difficulty in successfully evaluating and utilizing the acquired products, technology or personnel; • the potential incurrence of debt, contingent liabilities, amortization expenses or restructuring charges in connection with any acquisition; • the need to implement controls, procedures and policies appropriate for a larger, U.S.-based public company at companies that prior to acquisition may not have as robust controls, procedures and policies, in particular, with respect to the effectiveness of cyber and information security practices and incident response plans, compliance with privacy and other regulations protecting the rights of developers and users, and compliance with U.S.-based economic policies and sanctions which may not have previously been applicable to the acquired company’s operations; • the difficulty in accurately forecasting and accounting for the financial impact of an acquisition transaction, including accounting charges and integrating and reporting results for acquired companies that have not historically followed GAAP; • the fact that we may be required to pay contingent consideration in excess of the initial fair value, and contingent consideration may become payable at a time when we do not have sufficient cash available to pay such consideration; • under purchase accounting, we may be required to write off deferred revenue which may impair our ability to recognize revenue that would have otherwise been recognizable which may impact our financial performance or that of the acquired company; 29 TABLE OF CONTENTS • risks associated with our expansion into new international markets and doing business internationally, including those described under the risk factor caption “Our strategy to expand internationally will be subject to increased challenges and risks”; • in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries; • the need to transition operations, third-party developers and players onto our existing or new platforms and the potential loss of, or harm to, our relationships with employees, third-party developers, players and other suppliers as a result of integration of new businesses; • the implications of our management team balancing levels of oversight over acquired businesses which continue their operations under contingent consideration provisions in acquisition agreements; • our dependence on the accuracy and completeness of statements and disclosures made or actions taken by the companies we acquire or their representatives, when conducting due diligence and evaluating the results of such due diligence; and • liability for activities of the acquired company before the acquisition, including intellectual property and other litigation claims or disputes, cyber and information security vulnerabilities, violations of laws, rules and regulations, commercial disputes, tax liabilities and other known and unknown liabilities.
Challenges and risks from such investments and acquisitions include: • negative effects on business initiatives and strategies from the changes and potential disruption that may follow the acquisition; • diversion of our management’s attention; • declining employee morale and retention issues resulting from changes in compensation, or changes in management, reporting relationships, or future prospects; • the need to integrate the operations, systems, technologies, products and personnel of each acquired company, the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise in connection with integration; • the difficulty in determining the appropriate purchase price of acquired companies may lead to the overpayment for certain acquisitions and the potential impairment of intangible assets and goodwill acquired in the acquisitions; • the difficulty in successfully evaluating and utilizing the acquired products, technology or personnel; • the potential incurrence of debt, contingent liabilities, amortization expenses or restructuring charges in connection with any acquisition; • the need to implement controls, procedures and policies appropriate for a larger, U.S.-based public company at companies that prior to acquisition may not have as robust controls, procedures and policies, in particular, with respect to the effectiveness of cyber and information security practices and incident response plans, compliance with privacy and other regulations protecting the rights of developers and users, and compliance with U.S.-based economic policies and sanctions which may not have previously been applicable to the acquired company’s operations; • the difficulty in accurately forecasting and accounting for the financial impact of an acquisition transaction, including accounting charges and integrating and reporting results for acquired companies that have not historically followed generally accepted accounting principles (“GAAP”); • the fact that we may be required to pay contingent consideration in excess of the initial fair value, and contingent consideration may become payable at a time when we do not have sufficient cash available to pay such consideration; • under purchase accounting, we may be required to write off deferred revenue which may impair our ability to recognize revenue that would have otherwise been recognizable which may impact our financial performance or that of the acquired company; • risks associated with our expansion into new international markets and doing business internationally, including those described under the risk factor caption “Our strategy to expand internationally will be subject to increased challenges and risks”; • in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries; • the need to transition operations, third-party developers and players onto our existing or new platforms and the potential loss of, or harm to, our relationships with employees, third-party developers, players and other suppliers as a result of integration of new businesses; 33 TABLE OF CONTENTS • the implications of our management team balancing levels of oversight over acquired businesses which continue their operations under contingent consideration provisions in acquisition agreements; • our dependence on the accuracy and completeness of statements and disclosures made or actions taken by the companies we acquire or their representatives, when conducting due diligence and evaluating the results of such due diligence; and • liability for activities of the acquired company before the acquisition, including intellectual property and other litigation claims or disputes, cyber and information security vulnerabilities, violations of laws, rules and regulations, commercial disputes, tax liabilities and other known and unknown liabilities.
We may fail to maintain or be unable to obtain adequate protections for certain of our intellectual property rights in certain foreign countries because effective intellectual property protection may not be available to us in every country in which our services are available, and our intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States because of the differences in foreign patent, trademark, copyright, and other laws concerning intellectual property and proprietary rights. 32 TABLE OF CONTENTS We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with our third-party providers and strategic partners.
We may fail to maintain or be unable to obtain adequate protections for certain of our intellectual property rights in certain foreign countries because effective intellectual property protection may not be available to us in every country in which our services are available, and our intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States because of the differences in foreign patent, trademark, copyright, and other laws concerning intellectual property and proprietary rights. 30 TABLE OF CONTENTS We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with our third-party providers and strategic partners.
The credit facility and the indenture governing the senior secured notes include covenants restricting, among other things, our ability to do the following under certain circumstances: • incur or guarantee additional indebtedness or issue certain disqualified or preferred stock; • pay dividends or make other distributions on, or redeem or purchase any equity interests or make other restricted payments; • make certain acquisitions or investments; 42 TABLE OF CONTENTS • create or incur liens; • transfer or sell assets; • incur restrictions on the payment of dividends or other distributions from our restricted subsidiaries; • alter the business that we conduct; • enter into transactions with affiliates; • conduct buy-back or share repurchase programs; and • consummate a merger or consolidation or sell, assign, transfer, lease or otherwise dispose of all or substantially all our assets.
The credit facility and the indenture governing the senior secured notes include covenants restricting, among other things, our ability to do the following under certain circumstances: • incur or guarantee additional indebtedness or issue certain disqualified or preferred stock; • pay dividends or make other distributions on, or redeem or purchase any equity interests or make other restricted payments; • make certain acquisitions or investments; • create or incur liens; • transfer or sell assets; • incur restrictions on the payment of dividends or other distributions from our restricted subsidiaries; • alter the business that we conduct; • enter into transactions with affiliates; • conduct buy-back or share repurchase programs; and • consummate a merger or consolidation or sell, assign, transfer, lease or otherwise dispose of all or substantially all our assets.
Certain stock indices exclude companies with multi-class share structures, and funds tracking those indices may be unable to invest in our stock, which could further reduce demand and adversely affect our Class A share price. 40 TABLE OF CONTENTS Delaware law and provisions in our Fifth Amended and Restated Certificate of Incorporation (our “Charter”) and Amended and Restated Bylaws (our “Bylaws”) could make a takeover proposal more difficult.
Certain stock indices exclude companies with multi-class share structures, and funds tracking those indices may be unable to invest in our stock, which could further reduce demand and adversely affect our Class A share price. 37 TABLE OF CONTENTS Delaware law and provisions in our Fifth Amended and Restated Certificate of Incorporation (our “Charter”) and Amended and Restated Bylaws (our “Bylaws”) could make a takeover proposal more difficult.
As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses and other mechanisms cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it 31 TABLE OF CONTENTS could affect the manner in which we do business, the geographical location or segregation of our relevant operations, and could adversely affect our financial results.
As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses and other mechanisms cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we do business, the geographical location or segregation of our relevant operations, and could adversely affect our financial results.
If the 20 TABLE OF CONTENTS mobile devices on which our games are available decline in popularity or become obsolete faster than anticipated, we could experience a decline in revenue and Gross Marketplace Volume (“GMV”) and may not achieve the anticipated return on our development efforts.
If the mobile devices on which our games are available decline in popularity or become obsolete faster than anticipated, we could experience a 14 TABLE OF CONTENTS decline in revenue and Gross Marketplace Volume (“GMV”) and may not achieve the anticipated return on our development efforts.
Additionally, we are, and in the future, may again become, involved in claims, suits and proceedings with various parties. As a result of such litigation, we are, and int the future may again become party to various settlement agreements pursuant to which the parties agree we have the right to recover cash settlement amounts.
Additionally, we are, and in the future, may again become, involved in claims, suits and proceedings with various parties. As a result of such litigation, we are, and into the future may again become party to various settlement agreements pursuant to which the parties agree we have the right to recover cash settlement amounts.
Any of the foregoing impacts, individually or in aggregate, may have a material adverse effect on our business, financial position and results of operations. We have identified material weaknesses in our internal control over financial reporting as of December 31, 2023 and December 31, 2024.
Any of the foregoing impacts, individually or in aggregate, may have a material adverse effect on our business, financial position and results of operations. We have identified material weaknesses in our internal control over financial reporting as of December 31, 2025 and December 31, 2024.
It is also possible that new laws, policies, legal obligations or industry codes of conduct may be passed, or existing laws, policies, legal obligations or industry codes of conduct may be interpreted in such a way that could require us to take further compliance steps and/or could prevent us from being able to offer services to citizens of a certain jurisdiction or may make it costlier or more difficult for us to do so.
It is also possible that new laws, policies, legal obligations or industry codes of conduct may be passed, or existing laws, policies, legal obligations or industry codes of conduct may be interpreted in such a way that could require us to take 27 TABLE OF CONTENTS further compliance steps and/or could prevent us from being able to offer services to citizens of a certain jurisdiction or may make it costlier or more difficult for us to do so.
Competition within the broader entertainment industry is intense and our existing and potential users may be attracted to competing forms of entertainment such as television, movies and sporting events, as well as other entertainment and gaming options on the internet.
Risks Related to Our Industry Competition within the broader entertainment industry is intense and our existing and potential users may be attracted to competing forms of entertainment such as television, movies and sporting events, as well as other entertainment and gaming options on the internet.
If we are unable to negotiate new terms with Tether (or, when necessary, with any other top developers) or any new terms are less favorable to us, or if our litigation against Tether is unsuccessful, and games were to be removed from our platform and 17 TABLE OF CONTENTS we are unable to identify and market suitable replacements, there may be a material adverse effect on our business and results of operations.
If we are unable to negotiate new terms with Tether (or, when necessary, with any other top developers) or any new terms are less favorable to us, or if our litigation against Tether is unsuccessful, and games were to be removed from our platform and we are unable to identify and market suitable replacements, there may be a material adverse effect on our business and results of operations.
Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could impair the functionality of our platform, delay introductions of enhancements to our platform, result in our substituting inferior or costlier technologies into our platform or harm our reputation or brand and business, financial condition and results of operations.
Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could impair the functionality of our platform, delay introductions of enhancements to our platform, result in our substituting 31 TABLE OF CONTENTS inferior or costlier technologies into our platform or harm our reputation or brand and business, financial condition and results of operations.
Furthermore, programming errors, defects and data corruption could disrupt our operations, adversely affect the experience of end-users, harm our reputation, cause end-users to stop utilizing our platforms, divert our resources and delay market acceptance of our offerings, any of which could result in legal liability to us or harm our business, financial condition, results of operations and prospects.
Furthermore, programming errors, defects and data corruption could disrupt our operations, adversely affect the experience of end-users, harm our reputation, cause end-users to stop utilizing our platforms, divert our resources and delay market acceptance of our 20 TABLE OF CONTENTS offerings, any of which could result in legal liability to us or harm our business, financial condition, results of operations and prospects.
If that were to occur, we may be required to seek licenses, authorizations or approvals from relevant regulators, the granting of which may be dependent on us meeting certain capital and other requirements and we may become subject to additional regulation and oversight, all of which could be time consuming and significantly increase our operating costs.
If that were to occur, we may be required to seek licenses, authorizations or approvals from relevant regulators, the granting of which may be dependent on us meeting certain capital and 28 TABLE OF CONTENTS other requirements and we may become subject to additional regulation and oversight, all of which could be time consuming and significantly increase our operating costs.
Our third-party geolocation services provider relies on its ability to obtain information necessary to determine geolocation from mobile devices, operating systems, and other sources. Changes, disruptions or temporary or permanent failure to access such sources by our third-party services providers may result in their inability to accurately determine the location of end-users.
Our third-party geolocation services provider relies on its ability to obtain information necessary to determine geolocation from mobile devices, operating systems, and other sources. Changes, disruptions or temporary or permanent failure to access such 22 TABLE OF CONTENTS sources by our third-party services providers may result in their inability to accurately determine the location of end-users.
We are subject to a variety of laws in the U.S. and abroad that affect our business, including state and federal laws regarding skill-based gaming, consumer protection, electronic marketing, data protection and privacy, competition, taxation, intellectual property, artificial intelligence, export and national security, which are continuously evolving and developing.
We are subject to a variety of laws in the U.S. and abroad that affect our business, including state and federal laws regarding skill-based gaming, consumer protection, electronic marketing, data protection and privacy, competition, taxation, intellectual property, AI, export and national security, which are continuously evolving and developing.
The calculation of our key metrics and examples of how user activity and our systems may impact the calculation of these metrics is described in detail under the heading titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy.
The calculation of our key metrics and 18 TABLE OF CONTENTS examples of how user activity and our systems may impact the calculation of these metrics is described in detail under the heading titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy.
The negotiated agreements provide Skillz with the discretion, but not the obligation, to provide marketing support for specified games and for revenue sharing with the developers that is more favorable to Skillz than our standard terms. These negotiated agreements restrict the removal of the applicable games from our platform for at least 12 months following termination.
The negotiated agreements provide Skillz with the discretion, but not the obligation, to provide marketing support for specified games and for 15 TABLE OF CONTENTS revenue sharing with the developers that is more favorable to Skillz than our standard terms. These negotiated agreements restrict the removal of the applicable games from our platform for at least 12 months following termination.
Our workforce and operations have grown substantially since our inception. If we are unable to effectively manage future expected growth, our financial performance and future prospects will be adversely affected. We have experienced rapid growth since our inception, which has increased the complexity of our operations and placed significant demands on our management, personnel, systems, and internal controls.
If we are unable to effectively manage future expected growth, our financial performance and future prospects will be adversely affected. We have experienced rapid growth since our inception, which has increased the complexity of our operations and placed significant demands on our management, personnel, systems, and internal controls.
Any inability or failure to protect our intellectual property could adversely impact our business, results of operations, financial condition, reputation and prospects. 33 TABLE OF CONTENTS Our commercial success also depends in part on our ability to operate without infringing, misappropriating or otherwise violating the intellectual property rights of others.
Any inability or failure to protect our intellectual property could adversely impact our business, results of operations, financial condition, reputation and prospects. Our commercial success also depends in part on our ability to operate without infringing, misappropriating or otherwise violating the intellectual property rights of others.
Average end-user incentives, included as sales and marketing expense, per paying active user reflects the average end-user incentives included in sales and marketing expense in a given month divided by PMAUs in that month, averaged over the period.
Average end-user incentives, included as sales and marketing expense, per paying active user reflects the average end-user incentives included in sales and marketing expense in a given month divided by Paying MAUs in that month, averaged over the period.
Our technology infrastructure is critical to the performance of our platform and offerings and to the satisfaction of our developer partners and users. We devote significant resources to network and data security that are designed to protect our systems and data, including resources devoted to the rapid evolution and increased adoption of artificial intelligence technologies.
Our technology infrastructure is critical to the performance of our platform and offerings and to the satisfaction of our developer partners and users. We devote significant resources to network and data security that are designed to protect our systems and data, including resources devoted to the rapid evolution and increased adoption of AI technologies.
There is a risk that existing or future laws may be interpreted in a manner that is not consistent with our current practices, and could have an adverse effect on our business, financial condition, 22 TABLE OF CONTENTS results of operations and growth prospects.
There is a risk that existing or future laws may be interpreted in a manner that is not consistent with our current practices, and could have an adverse effect on our business, financial condition, results of operations and growth prospects.
Although alternative providers could host our platform on a substantially similar basis, such transition could potentially be disruptive and we could incur significant costs in connection with such transition. 25 TABLE OF CONTENTS Our use of third-party open source software could negatively affect our ability to offer our products and services through our platform and subject us to possible litigation.
Although alternative providers could host our platform on a substantially similar basis, such transition could potentially be disruptive and we could incur significant costs in connection with such transition. 21 TABLE OF CONTENTS Our use of third-party open-source software and AI Technologies could negatively affect our ability to offer our products and services through our platform and subject us to possible litigation.
Certain of our k ey metrics, including Monthly Active Users or “MAUs”, Paying Monthly Active Users or “Paying MAUs”, Average Revenue Per Monthly Active User or “ARPU”, Average Revenue Per Paying Monthly Active User or “ARPPU”, Gross Marketplace Volume “GMV”, Average GMV Per Paying Monthly Active User, Average GMV Per Monthly Active User, Average end-user incentives, included as sales and marketing expense, per paying active user, and Average end-user incentives, included as sales and marketing expense, per playing active user, are calculated using data tracked by our internal analytics systems based on tracking activity of user accounts.
Certain of our key metrics, including Monthly Active Users (“MAUs”), Paying Monthly Active Users (“Paying MAUs”), Average Revenue Per Monthly Active User (“ARPU”), Average Revenue Per Paying Monthly Active User (“ARPPU”), Gross Marketplace Volume (“GMV”), Average GMV Per Paying Monthly Active User, Average GMV Per Monthly Active User, Average end-user incentives, included as sales and marketing expense, per paying active user, and average end-user incentives, included as sales and marketing expense, per playing active user, are calculated using data tracked by our internal analytics systems based on tracking activity of user accounts.
We may become subject to legal proceedings brought by regulatory or governmental authorities, or subject to other legal proceedings, as a result of the errors or the related restatement, which could result in a loss of investor confidence or other reputational harm, the loss of key employees, additional defense and other costs.
We may become subject to legal proceedings brought by regulatory or governmental authorities, or subject to other legal proceedings, as a result of errors or restatements, which could result in a loss of investor confidence or other reputational harm, the loss of key employees, additional defense and other costs.
So long as more than 50% of the voting power for the election of our directors is held by an individual, a group or another company, we will qualify as a “controlled company” within the meaning of the NYSE corporate governance standards. As of December 31, 2024, Mr. Paradise controlled 84% of the voting power of our outstanding capital stock.
So long as more than 50% of the voting power for the election of our directors is held by an individual, a group or another company, we will qualify as a “controlled company” within the meaning of the NYSE corporate governance standards. As of December 31, 2025, Mr. Paradise controlled 87% of the voting power of our outstanding capital stock.
Use of open source software may also present additional security risks as the public availability of such software may make it easier for hackers and other third parties to determine how to compromise our platform.
Use of open-source software or open AI Technologies may also present additional security risks as the public availability of such software may make it easier for hackers and other third parties to determine how to compromise our platform.
We cannot predict the impact our dual class structure may have on our stock price of our Class A common stock; the dual class structure of our common stock has the effect of concentrating voting power with our Chief Executive Officer and Co-Founder, which will limit an investor’s ability to influence the outcome of important transactions, including a change in control.
We cannot predict the impact our dual class structure may have on our stock price of our Class A common stock; the dual class structure of our common stock has the effect of concentrating voting power with our CEO and Co-Founder, which will limit an investor’s ability to influence the outcome of important transactions, including a change in control.
Our operating history and our history of operating losses make it difficult to evaluate our current business and prospects and may increase the risks associated with your investment. Our operating history makes it difficult to evaluate our current business and our future prospects, including our ability to plan for and model future growth.
Risks Related to Financial Matters Our operating history and our history of operating losses make it difficult to evaluate our current business and prospects and may increase the risks associated with your investment. Our operating history makes it difficult to evaluate our current business and our future prospects, including our ability to plan for and model future growth.
In addition, we cannot assure you that digital advertising costs will not continue to increase in 2025 or any other future period.
In addition, we cannot assure you that digital advertising costs will not continue to increase in 2026 or any other future period.
We have agreed to reimburse our payment processors for fines they are assessed by payment card networks if we or the users on our platform violate these rules. 27 TABLE OF CONTENTS Our payment activities are subject to extensive card-network rules and laws governing money transmission, fraud prevention, and data security.
We have agreed to reimburse our payment processors for fines they are assessed by payment card networks if we or the users on our platform violate these rules. Our payment activities are subject to extensive card-network rules and laws governing money transmission, fraud prevention, and data security.
Our ability to compete and grow depends heavily on the efforts and talents of our employees and senior management, including our Co-Founder and Chief Executive Officer, Andrew Paradise. The loss of Mr. Paradise or other key members of our leadership team could disrupt our operations and adversely affect our business, financial condition, and results of operations.
Our ability to compete and grow depends heavily on the efforts and talents of our employees and senior management, including our Co-Founder and CEO, Andrew Paradise. The loss of Mr. Paradise or other key members of our leadership team could disrupt our operations and adversely affect our business, financial condition, and results of operations.
Failure to obtain, maintain, protect or enforce our intellectual property rights could harm our business, results of operations, financial condition and prospects. Our success depends in part on our ability to protect our intellectual property, including our proprietary technology, content, brand, and know-how.
Risks Relating to Data Security and Intellectual Property Failure to obtain, maintain, protect or enforce our intellectual property rights could harm our business, results of operations, financial condition and prospects. Our success depends in part on our ability to protect our intellectual property, including our proprietary technology, content, brand, and know-how.
We may require additional capital to support our growth plans, and such capital may not be available on terms acceptable to us, if at all. This could hamper our growth and adversely affect our business, financial condition, results of operations and prospects.
We may require additional capital to support our growth plans or refinance our existing indebtedness, and such capital may not be available on terms acceptable to us, if at all. This could hamper our growth and adversely affect our business, financial condition, results of operations and prospects.
An adverse outcome in one or more proceedings could adversely affect our business ” below for additional information related to risks associated with our litigation.
An adverse outcome in one or more proceedings could adversely affect our business” below for additional information related to risks associated with our litigation.
Expanding our international focus may subject us to risks that we have not faced before or increase risks that we currently face, including risks associated with: • inability to host certain games in certain foreign countries; • challenges caused by distance, language and cultural differences; • developing and customizing games and other offerings that appeal to the tastes and preferences of players in international markets; • competition from local game makers with significant market share in those markets and with a better understanding of player preferences; • utilizing, protecting, defending and enforcing our intellectual property rights; • the inability to extend proprietary rights in our brand, content or technology into new jurisdictions; • implementing alternative payment methods for virtual items in a manner that complies with local laws and practices and protects us from fraud; • compliance with applicable foreign laws and regulations, including privacy laws and laws relating to content and consumer protection; • compliance with anti-bribery laws, including the Foreign Corrupt Practices Act; • credit risk and higher levels of payment fraud; • currency exchange rate fluctuations; • protectionist laws and business practices that favor local businesses in some countries; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the U.S. or the foreign jurisdictions in which we operate; • political, economic and social instability; • higher costs associated with doing business internationally; • export or import regulations; and • trade and tariff restrictions. 28 TABLE OF CONTENTS If we are unable to manage the complexity of our global operations successfully, our business, financial condition and operating results could be adversely affected.
Expanding our international focus may subject us to risks that we have not faced before or increase risks that we currently face, including risks associated with: • inability to host certain games in certain foreign countries; • challenges caused by distance, language and cultural differences; • developing and customizing games and other offerings that appeal to the tastes and preferences of players in international markets; • competition from local game makers with significant market share in those markets and with a better understanding of player preferences; • utilizing, protecting, defending and enforcing our intellectual property rights; • the inability to extend proprietary rights in our brand, content or technology into new jurisdictions; • implementing alternative payment methods for virtual items in a manner that complies with local laws and practices and protects us from fraud; • compliance with applicable foreign laws and regulations, including privacy laws and laws relating to content and consumer protection; • compliance with anti-bribery laws, including the Foreign Corrupt Practices Act; • credit risk and higher levels of payment fraud; • currency exchange rate fluctuations; • protectionist laws and business practices that favor local businesses in some countries; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the U.S. or the foreign jurisdictions in which we operate; • political, economic and social instability; • higher costs associated with doing business internationally; • export or import regulations; and • trade and tariff restrictions.
Given our prominence in the gaming industry, we believe we are a particularly attractive target for hackers. Additionally, rapidly evolving technology and capabilities (including artificial 21 TABLE OF CONTENTS intelligence), evolving changes in the sources, capabilities and targets for cybersecurity attacks, as well as the increasing sophistication of cyber criminals increase the risk of material data compromise or business disruption.
Given our prominence in the gaming industry, we believe we are a particularly attractive target for hackers. Additionally, rapidly evolving technology and capabilities (including AI), evolving changes in the sources, capabilities and targets for cybersecurity attacks, as well as the increasing sophistication of cyber criminals increase the risk of material data compromise or business disruption.
End-user liability as of December 31, 2024 amounted to $6.9 million and is reflected in our balance sheet within other current liabilities. Typically, these funds are returned to end-users if they choose to withdraw them from their account.
End-user liability as of December 31, 2025 amounted to $8.2 million and is reflected in our balance sheet within other current liabilities. Typically, these funds are returned to end-users if they choose to withdraw them from their account.
If alternate technology cannot be obtained or developed, we may not be able to offer certain functionality as part of our offerings, which could adversely affect our business, financial condition and results of operations and prospects.
If alternate technology cannot be obtained or developed, we may not be able to offer certain functionality as part of our offerings, which could adversely affect our business, financial condition and results of operations and prospects. Our workforce and operations have fluctuated substantially since our inception.
These provisions provide for, among other things: • the ability of our Board to issue one or more series of preferred stock; • stockholder action by written consent only until the first time when Mr.
These provisions provide for, among other things: • the ability of our Board to issue one or more series of preferred stock and assign the terms of such preferred stock, without stockholder approval; • stockholder action by written consent only until the first time when Mr.
If we are unable to maintain or grow our market share or keep our platform offerings popular with users, our business, financial condition, and results of operations could be adversely affected. We are subject to risks associated with competitors that do not follow ethical fairness practices to grow their businesses.
If we are unable to maintain user engagement or grow our market share, our business, financial condition, and results of operations could be adversely affected. We are subject to risks associated with competitors that do not follow ethical fairness practices to grow their businesses.
Our dual class common stock structure concentrates significant voting power with our Chief Executive Officer and Co-Founder, Andrew Paradise, which limits other stockholders’ ability to influence key corporate decisions. Shares of our Class B common stock carry 20 votes per share, compared to one vote per share for our Class A common stock. As of December 31, 2024, Mr.
Our dual class common stock structure concentrates significant voting power with our CEO and Co-Founder, Andrew Paradise, which limits other stockholders’ ability to influence key corporate decisions. Shares of our Class B common stock carry 20 votes per share, compared to one vote per share for our Class A common stock. As a result, Mr.
Any failure to prevent or mitigate these risks could adversely affect our business, financial condition, results of operations, and reputation. 19 TABLE OF CONTENTS Maintaining and enhancing our brand and reputation is critical to our business prospects. Failure to maintain or grow our brand and reputation could harm our business, financial condition and results of operations.
Our inability to effectively prevent or mitigate these risks could adversely affect our business, financial condition, results of operations, and reputation. Maintaining and enhancing our brand and reputation is critical to our business prospects. Failure to maintain or grow our brand and reputation could harm our business, financial condition and results of operations.
Any disruption in our payment processing capabilities could materially adversely affect our business, financial condition, and results of operations Our strategy to expand internationally will be subject to increased challenges and risks; our growth prospects and market potential will depend on our ability to operate in a number of jurisdictions and if we fail to do so our business, financial condition, results of operations and prospects could be impaired.
Our strategy to expand internationally will be subject to increased challenges and risks; our growth prospects and market potential will depend on our ability to operate in a number of jurisdictions and if we fail to do so our business, financial condition, results of operations and prospects could be impaired.
As of December 31, 2024, we had an accumulated deficit of $1,021.3 million. The industry in which we operate is highly competitive, rapidly changing (including changes with respect to advancements in artificial intelligence), and relies heavily on continually introducing compelling content, products and services.
As of December 31, 2025, we had an accumulated deficit of $1,091.7 million . The industry in which we operate is highly competitive, rapidly changing (including changes with respect to advancements in AI), and relies heavily on continually introducing compelling content, products and services.
We rely on other third-party service providers and if such third parties do not perform adequately or terminate their relationships with us, our costs may increase and our business, financial condition and results of operations could be adversely affected. Our success depends in part on our relationships with our third-party service providers.
Any disruption in our payment processing capabilities could materially adversely affect our business, financial condition, and results of operations. We rely on other third-party service providers and if such third parties do not perform adequately or terminate their relationships with us, our costs may increase and our business, financial condition and results of operations could be adversely affected.
As discussed in Part II – 9A, “ Controls and Procedures”, of this Annual Report, our management concluded that material weaknesses existed as of December 31, 2024.
As discussed in Part II, Item 9A, Controls and Procedures, of this Annual Report, our management concluded that material weaknesses existed as of December 31, 2025.
Any of the foregoing could disrupt and harm our business. In addition, the use of third-party open source software typically exposes us to greater risks than the use of third-party commercial software as open source licensors generally do not provide support, warranties, controls, indemnification or other contractual protections regarding the functionality or origin of the software.
In addition, the use of third-party open-source software or open AI Technologies typically exposes us to greater risks than the use of third-party commercial software as open-source licensors generally do not provide support, warranties, controls, indemnification or other contractual protections regarding the functionality or origin of the software.
Compliance with any such legislation may have a material adverse effect on our business, financial condition results of operations and prospects, either as a result of our determination that a jurisdiction should be blocked, or that a local license or approval may be costly for us or our business partners to obtain and/or such licenses or approvals may contain other commercially undesirable conditions. 23 TABLE OF CONTENTS Changes in tax laws or tax rulings could materially affect our effective tax rates, financial position and results of operations.
Compliance with any such legislation may have a material adverse effect on our business, financial condition results of operations and prospects, either as a result of our determination that a jurisdiction should be blocked, or that a local license or approval may be costly for us or our business partners to obtain and/or such licenses or approvals may contain other commercially undesirable conditions.
Such losses could adversely affect our business prospects, results of operations and financial condition. 36 TABLE OF CONTENTS The requirements of being a public company, including compliance with the Exchange Act and the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), may strain our resources and divert management’s attention, the increases in legal, accounting and compliance expenses may be greater than we anticipate, and there can be no assurance that we will continue to satisfy these obligations.
The requirements of being a public company, including compliance with the Exchange Act and the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), may strain our resources and divert management’s attention, the increases in legal, accounting and compliance expenses may be greater than we anticipate, and there can be no assurance that we will continue to satisfy these obligations.
If other banks and financial institutions with whom we have banking relationships enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, we may be unable to access, and we may lose, some or all of our existing cash and cash equivalents and investments to the extent those funds are not insured or otherwise protected by the FDIC.
If banks and financial institutions with whom we have banking relationships enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, we may be unable to access, and we may lose, some or all of our existing cash and cash equivalents and investments to the extent those funds are not insured or otherwise protected by the FDIC. 34 TABLE OF CONTENTS Risks Related to Our Indebtedness Our indebtedness could adversely affect our financial health and our ability to execute our business strategy.
The Company then conducted a review of other foreign jurisdictions and determined it was liable for indirect taxation in various countries. See Note 10 , Commitments and Contingencies, for further details.
The Company then conducted a review of other foreign jurisdictions and determined it was liable for indirect taxation in various countries. See Note 9, Commitments and Contingencies, in Part II, Item 8 of this Annual Report for further details.
If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business, financial condition or results of operations may be harmed. 37 TABLE OF CONTENTS Our investment portfolio and our ability to access cash and cash equivalents may become impaired by deterioration of the financial markets.
If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business, financial condition or results of operations may be harmed.
Failure to protect our domain names could adversely affect our reputation and brand and make it more difficult for users to find our website and our online app.
We currently hold various domain names relating to our brand, including Skillz.com. Failure to protect our domain names could adversely affect our reputation and brand and make it more difficult for users to find our website and our online app.
Moreover, it may be difficult or impossible to obtain evidence of bot use in a competitor’s or potential competitor’s products, which would prevent us from successfully deterring bot misuse among our competitors. We are subject to risks associated with disruptive technologies, including artificial intelligence.
Moreover, it may be difficult or impossible to obtain evidence of bot use in a competitor’s or potential competitor’s products, which would prevent us from successfully deterring bot misuse among our competitors.
These games, and the related developers, have historically been subject to our terms of service, which include, among other things, developer exclusivity for certain periods of time, as modified by negotiated agreements.
For the year ended December 31, 2025 , Tether accounted for 51% of our revenue and Big Run accounted for 23% of revenue. These games, and the related developers, have historically been subject to our terms of service, which include, among other things, developer exclusivity for certain periods of time, as modified by negotiated agreements.
If those providers do not perform adequately, end-users may experience issues or interruptions with their experiences on our platform.
Our success depends in part on our relationships with our third-party service providers. If those providers do not perform adequately, end-users may experience issues or interruptions with their experiences on our platform.
If any of these were to occur, there is no assurance that any appeal we undertake in these or other circumstances would be successful, nor is there any assurance that we will remain in compliance with the other NYSE continued listing standards.
If any of these were to occur, there is no assurance that any appeal we undertake in these or other circumstances would be successful, nor is there any assurance that we will remain in compliance with the other NYSE continued listing standards. 36 TABLE OF CONTENTS If we fail to satisfy the NYSE’s continued listing standards, our Class A common stock will be subject to delisting.
Acquisitions could result in potential dilutive issuances of equity securities, use of significant cash balances or incurrence of debt (and increased interest expense), contingent liabilities or amortization expenses related to intangible assets or write-offs of goodwill and/or intangible assets, which could adversely affect our financial condition and results of operations and dilute the economic and voting rights of our stockholders. 30 TABLE OF CONTENTS We are subject to laws and regulations concerning privacy, information security, data protection, consumer protection and protection of minors, and these laws and regulations are continually evolving.
Acquisitions could result in potential dilutive issuances of equity securities, use of significant cash balances or incurrence of debt (and increased interest expense), contingent liabilities or amortization expenses related to intangible assets or write-offs of goodwill and/or intangible assets, which could adversely affect our financial condition and results of operations and dilute the economic and voting rights of our stockholders.
We cannot be certain that our licensors are not infringing, misappropriating or otherwise violating the intellectual property rights of others or that our suppliers and licensors have sufficient rights to such technology in all jurisdictions in which we may operate. In addition, some of our license agreements may be terminated by our licensors for convenience.
We incorporate technology from third parties into our platform. We cannot be certain that our licensors are not infringing, misappropriating or otherwise violating the intellectual property rights of others or that our suppliers and licensors have sufficient rights to such technology in all jurisdictions in which we may operate.
Any failure to adequately obtain such patent protection, or other intellectual property protection, could later prove to adversely impact our business, results of operations, financial condition or prospects. We currently hold various domain names relating to our brand, including Skillz.com.
Any failure to adequately obtain such patent protection, or other intellectual property protection, could later prove to adversely impact our business, results of operations, financial condition or prospects.
If we are not able to continue to provide high levels of customer service, we may lose acquired users. Our business is subject to a variety of U.S. and foreign laws, many of which are unsettled and still developing and which could subject us to claims or otherwise harm our business, financial condition, results of operations and growth prospects.
Our business is subject to a variety of U.S. and foreign laws, many of which are unsettled and still developing and which could subject us to claims or otherwise harm our business, financial condition, results of operations and growth prospects.
We rely on information technology (“IT”) and other systems and platforms, and any failures, errors, defects or disruptions in our or our vendors’ or other partners’ systems or platforms could diminish our brand and reputation, subject us to liability, disrupt our business, affect our ability to scale our technical infrastructure and adversely affect our business, financial condition, operating results and growth prospects.
Additionally, our ability to successfully gain market acceptance in any particular market is uncertain, and the distraction of our senior management team could harm our business, financial condition, results of operations and prospects. 19 TABLE OF CONTENTS We rely on information technology (“IT”) and other systems and platforms, and any failures, errors, defects or disruptions in our or our vendors’ or other partners’ systems or platforms could diminish our brand and reputation, subject us to liability, disrupt our business, affect our ability to scale our technical infrastructure and adversely affect our business, financial condition, operating results and growth prospects.
Recruitment and retention of these individuals is vital to growing our business and meeting our business plans. The loss of any of our key executives or other key employees could harm our business.
The growth and success of our business will depend on the performance of the current and future employees of Skillz, including certain key employees. Recruitment and retention of these individuals is vital to growing our business and meeting our business plans. The loss of any of our key executives or other key employees could harm our business.
It may become increasingly difficult and more expensive for us to acquire players for our games and we may not achieve a positive return on investment on our user acquisition efforts.
It may become increasingly difficult and more expensive for us to acquire players for our games and we may not achieve a positive return on investment on our user acquisition efforts. User acquisition is critical to our business and may become more difficult and costly due to increasing competition in mobile and real-money gaming.
In addition, the failure of developers to provide timely and reliable updates to their games could adversely impact our financial condition, results of operations and prospects. We rely significantly on third-party game developers to develop the games that we host on our platform.
In addition, the failure of developers to provide timely and reliable updates to their games could adversely impact our financial condition, results of operations and prospects.
Global climate change, the occurrence of an earthquake, other natural disaster or other significant business interruption at or near any of our facilities could cause damage to our facilities and equipment and interfere with our operations.
Any sustained economic weakness or geopolitical instability could adversely affect our user engagement, revenue, and overall business, financial condition, results of operations, and prospects. Global climate change, the occurrence of an earthquake, other natural disaster or other significant business interruption at or near any of our facilities could cause damage to our facilities and equipment and interfere with our operations.
Compliance with GDPR, CCPA, COPPA and similar legal requirements has required us to devote significant operational resources and incur significant expenses.
Compliance with GDPR, CCPA, COPPA and similar legal requirements adopted in the United States and in other non-U.S. jurisdictions has required us to devote significant operational resources and incur significant expenses.
If we fail to do so, or if future restructuring or reductions in force produce unintended attrition, lower morale, or reputational harm, our ability to attract and retain talent and achieve operational objectives could be materially and adversely affected. 35 TABLE OF CONTENTS The growth and success of our business will depend on the performance of the current and future employees of Skillz, including certain key employees.
If we fail to do so, or if future restructuring or reductions in force produce unintended attrition, lower morale, or reputational harm, our ability to attract and retain talent and achieve operational objectives could be materially and adversely affected.
Economic downturns and political and market conditions beyond our control could adversely affect our business, financial condition, results of operations and prospects.
Any failure to effectively recruit, retain, and motivate key executives and employees could materially and adversely affect our business, financial condition, results of operations, and prospects. Economic downturns and political and market conditions beyond our control could adversely affect our business, financial condition, results of operations and prospects.
The decision of developers to remove the Skillz Software Development Kit, or "SDK" from their games or changes in the terms of our commercial relationship with third-party developers could adversely impact our financial condition, results of operations and prospects.
We rely on our third-party developer partners to develop and update all of the game features on our platform not tied to our SDK. The decision of developers to remove the SDK from their games or changes in the terms of our commercial relationship with third-party developers could adversely impact our financial condition, results of operations and prospects.
We have incorporated, and may in the future incorporate, third-party open source software in our technologies. Open source software is generally licensed by its authors or other third parties under open source licenses.
We have incorporated, and may in the future incorporate, third-party open-source software in our technologies. Open source software is generally licensed by its authors or other third parties under open-source licenses. From time to time, companies that use third-party open-source software have faced claims challenging the use of such open-source software and requesting compliance with the open-source software license terms.
Moreover, any loss incurred could exceed policy limits and policy payments made to us may not be made on a timely basis.
Moreover, any loss incurred could exceed policy limits and policy payments made to us may not be made on a timely basis. Such losses could adversely affect our business prospects, results of operations and financial condition.
The instruments governing our indebtedness, including the indenture governing our senior secured notes, contain certain covenants imposing restrictions on our business.
The instruments governing our indebtedness impose certain restrictions on our business, and future such instruments could impose new restrictions on our business. The indenture governing our senior secured notes, contains certain covenants imposing restrictions on our business.
In assessing these risks, you should also refer to the other information contained in this Annual Report, including our consolidated financial statements and related notes. SUMMARY RISK FACTORS Our business is subject to numerous risks and uncertainties, all of which are more fully described in the Risk Factors below.
In assessing these risks, you should also refer to the other information contained in this Annual Report, including our consolidated financial statements and related notes.
If our revenue does not increase to offset any additional expenses, if we fail to manage or experience unexpected increases in operating expenses or if we are required to take additional charges related to impairments or restructurings, our business, financial condition, results of operations and prospects may be materially adversely affected. 34 TABLE OF CONTENTS We rely on assumptions and estimates to calculate certain of our key metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.
If our revenue does not increase to offset any additional expenses, if we fail to manage or experience unexpected increases in operating expenses or if we are required to take additional charges related to impairments or restructurings, our business, financial condition, results of operations and prospects may be materially adversely affected. 32 TABLE OF CONTENTS Our results of operations may fluctuate due to seasonality and other factors and, therefore, our periodic operating results will not be guarantees of future performance.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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The Security Council has primary management oversight responsibility for assessing and managing risks related to information security, fraud, vendor oversight, data protection and privacy, and our cybersecurity program, as well as responsibility for management of our information security systems. The Board is responsible for overseeing the Company's enterprise risk. The Security Council reports to the Board on cybersecurity risks.
The Security Council has primary management oversight responsibility for assessing and managing risks related to information security, fraud, vendor oversight, data protection and privacy, and our cybersecurity program, as well as responsibility for management of our information security systems. The Board is responsible for overseeing the Company's enterprise risk. The Security Council will report to the Board on cybersecurity risks.
We can provide no assurance that there will not be incidents in the future or that such incidents will not materially affect us, including 43 TABLE OF CONTENTS our business strategy, results of operations, or financial condition.
We can provide no assurance that there will not be incidents in the future or that such incidents will not materially affect us, including our business strategy, results of operations, or financial condition.
We also conduct annual cybersecurity tabletop exercises, with the intent of validating our IR policies and procedures.
We also conduct annual cybersecurity tabletop exercises, with the intent of validating our policies and procedures. 41 TABLE OF CONTENTS
External Assessments Our cybersecurity policies, standards, processes and practices are periodically assessed by consultants and external auditors. These assessments include a variety of activities including information security maturity assessments, audits and independent reviews of our information security control environment and operating effectiveness.
We also conduct periodic phishing training and follow-up with remedial testing and training as necessary. External Assessments Our cybersecurity policies, standards, processes and practices are periodically assessed by consultants and external auditors. These assessments include a variety of activities including information security maturity assessments, audits and independent reviews of our information security control environment and operating effectiveness.
Risk Assessment We conduct a cybersecurity risk assessment at least annually that takes into account information from internal resources (e.g., vulnerability scans, incident reporting), known information security vulnerabilities, and information received from external sources (e.g., reported security incidents that have impacted other companies, industry trends, and evaluations by third parties and consultants).
Risk Assessment We periodically conduct a cybersecurity risk assessment that takes into account information from internal resources (e.g., vulnerability scans, incident reporting), known information security vulnerabilities, and information received from external sources (e.g., reported security incidents that have impacted other companies, industry trends, and evaluations by third parties and consultants). 40 TABLE OF CONTENTS Technical Safeguards We periodically assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats.
We periodically remind and reinforce with our employees the importance of handling and protecting customer and employee data, including through annual privacy and security training designed to enhance awareness of how to prevent, detect, report, and respond to cybersecurity threats. We also conduct periodic phishing training and follow-up with remedial testing and training as necessary.
Education and Awareness Our policies require each of our employees to contribute to our data security efforts. We periodically remind and reinforce with our employees the importance of handling and protecting customer and employee data, including through annual privacy and security training designed to enhance awareness of how to prevent, detect, report, and respond to cybersecurity threats.
To ensure robust oversight, we are establishing a Security Council, led by our Principal Security Engineer, that is comprised of senior leaders, including our Chief Executive Officer, Controller, Chief Financial Officer, and Interim General Counsel.
His responsibilities include securing infrastructure, implementing security controls, and supporting secure business operations. To ensure robust oversight, we are establishing a Security Council, led by our consultant, that is comprised of senior leaders, including our Chief Financial Officer, Chief Accounting Officer and Interim General Counsel.
Third-Party Risk Management We have implemented controls designed to identify and mitigate cybersecurity threats associated with our use of third-party service providers. Such providers may be subject to security risk assessments at the time of onboarding, contract renewal, or upon detection of an increase in risk profile, according to our vendor security review process.
Such providers may be subject to security risk assessments at the time of onboarding, contract renewal, or upon detection of an increase in risk profile, according to our vendor security review process. We use a variety of inputs in such risk assessments, including information supplied by providers and third parties.
In addition to our ongoing ordinary course cybersecurity oversight procedures, we also have a security incident response framework in place. We use this incident response framework as part of the process we employ to keep our management and the Board informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents.
We use this incident response framework, which includes an applicable incident response reporting obligations, as part of the process we employ to keep our management and the Board informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents.
We have devoted significant financial and personnel resources to implement and maintain security measures in an effort to meet regulatory requirements and customer expectations, and we intend to continue to make significant investments in our data and cybersecurity infrastructure.
As described in more detail below, we have established policies, standards, processes and practices designed to assess, identify, and manage material risks from cybersecurity threats. We have devoted resources to implement and maintain security measures in an effort to meet regulatory requirements and customer expectations, and we intend to continue to make investments in our data and cybersecurity infrastructure.
There can be no guarantee that our policies and procedures will be effective, as cyber criminals are becoming more sophisticated and effective every day and increasingly targeting enterprise software companies.
There can be no guarantee that our policies and procedures will be effective, as cyber criminals are becoming more sophisticated and effective every day and increasingly targeting enterprise software companies. Although our Risk Factors include further detail about the material cybersecurity risks we face, we believe that risks from cybersecurity threats have not materially affected our business to date.
Technical Safeguards We periodically assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats. Such safeguards are periodically evaluated and improved as necessary, based on vulnerability assessments, cybersecurity threat intelligence and incident response experience.
Such safeguards are periodically evaluated and improved as necessary, based on vulnerability assessments, cybersecurity threat intelligence and incident response experience. Third-Party Risk Management We have implemented controls designed to identify and mitigate cybersecurity threats associated with our use of third-party service providers.
ITEM 1C. CYBERSECURITY We take a comprehensive approach to cybersecurity risk management. While securing our customers and stakeholders’ data is a top priority, like many companies with a public presence, we are subject to human-targeted and AI-assisted cyberattacks.
ITEM 1C. CYBERSECURITY We take a comprehensive approach to cybersecurity risk management. We focus on securing our customers and stakeholders’ data to mitigate human-targeted and AI-assisted cyberattacks. Our Board of Directors of the Company (the "Board") and our management are involved in the oversight of our risk management program, of which cybersecurity represents an important component.
For example, in 2022, 2023 and 2024 we conducted independent cyber maturity assessments to review our controls against portions of the NIST Cybersecurity Framework. We also have achieved PCI SAQ-A Compliance every year since 2019. The results of significant assessments are reported to management, the Board and Audit Committee.
We also have achieved PCI SAQ-A Compliance every year since prior to becoming a public entity. The results of significant assessments are reported to management, the Board and Audit Committee. Cybersecurity processes are adjusted, as appropriate, based on the information provided from these assessments.
For the year ended December 31, 2024, we are not aware of any material cybersecurity incidents that had a significant impact on our operations or financial condition.
For the periods presented in this Annual Report and through its filing, we were not aware of any material cybersecurity incidents that had a significant impact on our operations or financial condition. For more information on our cybersecurity related risks in Part I, Item 1A Risk Factors of this Annual Report.
Removed
Our board of directors (the "Board") and our management are involved in the oversight of our risk management program, of which cybersecurity represents an important component. As described in more detail below, we have established policies, standards, processes and practices designed to assess, identify, and manage material risks from cybersecurity threats.
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Governance We engage a consultant who is responsible for the day-to-day assessment and management of our material cybersecurity risks. The consultant has over 10 years of experience in providing various aspects of security services (including the establishment of IT infrastructure and security maintenance) over the course of his career.
Removed
Although our Risk Factors include further detail about the material cybersecurity risks we face, we believe that risks from prior cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected our business to date.
Added
In addition to our ongoing ordinary course cybersecurity oversight procedures, we also have a security incident response framework in place.
Removed
For more information on our cybersecurity related risks see the risk factor entitled “ We rely on information technology (“IT”) and other systems and platforms, and any failures, errors, defects or disruptions in our or our vendors ’ or other partners’ systems or platforms could diminish our brand and reputation, subject us to liability, disrupt our business, affect our ability to scale our technical infrastructure and adversely affect our business, financial condition, operating results and growth prospects” in Part I, Item 1A Risk Factors of this Annual Report on Form 10-K, above.
Removed
Incident Response and Recovery Planning We have established comprehensive incident response (“IR”) and recovery plans and continue to periodically test and evaluate the effectiveness of those plans. Our IR plan provides our team with strategies for how to respond to incidents appropriately.
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We use a variety of inputs in such risk assessments, including information supplied by providers and third parties. 44 TABLE OF CONTENTS Education and Awareness Our policies require each of our employees to contribute to our data security efforts.
Removed
Cybersecurity processes are adjusted, as appropriate, based on the information provided from these assessments. Governance Our Principal Security Engineer (“PSE”) is responsible for the day-to-day assessment and management of our material cybersecurity risks.
Removed
Since November 2021 until May 2025, the Principal Security Engineer (the “PSE-1”) that served in this role had more than 18 years of experience in various information technology, cybersecurity and systems engineering roles.
Removed
PSE-1’s previous experience includes building and leading cybersecurity functions at large enterprises, startups, and research and development centers, as well as leading software teams which were acquired by Fortune 50 enterprises. PSE-1 also had expertise in building and designing secure software, scalable and resilient systems, incident response practices, privacy programs and other critical security disciplines and practice areas.
Removed
The Principal Security Engineer holds a master's degree in physics and systems engineering. Since May 2025, the Company’s Manager of IT (“PSE-2”) has assumed the responsibilities of the Principal Security Engineer role.
Removed
With more than 18 years of experience in information technology and over 12 years in IT management across technology-driven and interactive entertainment organizations, PSE-2 has frequently led both IT operations and cybersecurity initiatives, often as the sole technical lead. Responsibilities have included securing infrastructure, implementing security controls, and supporting secure business operations.

Item 2. Properties

Properties — owned and leased real estate

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We also lease offices in smaller buildings and coworking spaces in major cities. In connection with our acquisition of Aarki in 2021, we assumed leases for a number of offices and coworking 45 TABLE OF CONTENTS spaces around the world, including data centers in the U.S. and Hong Kong and a workspace in the Philippines for our Aarki segment.
We also lease offices in smaller buildings and coworking spaces in major cities. In connection with our acquisition of RZR in 2021, we assumed leases for a number of offices and coworking spaces around the world, including data centers in the U.S. and Hong Kong and a workspace in the Philippines for our RZR segment.
In August 2025, we commenced a 36 month lease for office space in Bangalore, India for approximately $35.7 thousand per month with escalations of 6% per annum.
During the year ended December 31, 2025 , we commenced a lease for office space in Bangalore, India with a term of 36 months. Future rent obligations as lease commencement totaled approximately $1.4 million .

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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On December 5, 2024, our Board of Directors reapproved the Company’s share repurchase program, pursuant to which the Company is authorized to purchase up to $41.1 million of its Class A Common Stock remaining under the Company’s legacy repurchase program and extended the expiration date until otherwise suspended, terminated or modified an any time for any reason by the Board.
On December 5, 2024, our Board of Directors re-approved the Company’s share repurchase program, pursuant to which the Company is authorized to purchase up to $41.1 million of its Class A Common Stock remaining under the Company’s legacy repurchase program and extended the expiration date until otherwise suspended, terminated or modified at any time for any reason by the Board.
Holders of our Common Stock As of November 3, 2025, there were 244 holders of record of our Class A common stock and one holder of record of our Class B common stock. The number of record holders does not include Depository Trust Company participants or beneficial owners holding shares through nominee names.
Holders of our Common Stock As of March 27, 2026, there were 234 holders of record of our Class A common stock and one holder of record of our Class B common stock. The number of record holders does not include Depository Trust Company participants or beneficial owners holding shares through nominee names.
The payment of any cash dividends will be within the discretion of the Board at such time. Securities Authorized for Issuance Under Equity Compensation Plans Refer to Note 14, “Stock-Based Compensation,” in this Form 10-K.
The payment of any cash dividends will be within the discretion of the Board at such time. Securities Authorized for Issuance Under Equity Compensation Plans Refer to Note 13, Stock-Based Compensation, in Part II, Item 8 of this Annual Report.
Unregistered Sales of Equity Securities None. 47 TABLE OF CONTENTS Repurchases The following table provides information about the purchases of our common stock made through the three months ended December 31, 2024: Periods Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)(b) October 1, 2024 through October 31, 2024 — $ — — $ 41.1 November 1, 2024 through November 30, 2024 192,273 $ 5.35 192,273 $ 40.1 December 1, 2024 through December 31, 2024(a) 1,090,676 $ 6.80 1,090,676 $ 32.6 Total 1,282,949 $ 6.58 1,282,949 (a) Amounts for the period of December 1, 2024 through December 31, 2024 include amounts repurchased pursuant to two Share Repurchase Agreements with Wildcat Capital Management, LLC and Wildcat Partner Holdings, LP (the “Share Repurchase Agreements”).
Unregistered Sales of Equity Securities None. 43 TABLE OF CONTENTS Repurchases The following table provides information about the purchases of our common stock made through the three months ended December 31, 2025: Periods Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (a) October 1, 2025 through October 31, 2025 1,584 $ 6.62 1,584 $ 24.9 November 1, 2025 through November 30, 2025 145,301 $ 5.84 145,301 $ 24.1 December 1, 2025 through December 31, 2025 117,960 $ 5.67 117,960 $ 23.4 Total 264,845 $ 5.77 264,845 (a) In August 2023, our Board of Directors approved a share repurchase authorization for up to $65.0 million of our common stock.
Removed
Pursuant to the Share Repurchase Agreements, the Company agreed to repurchase 961,532 shares of its Class A Common Stock from Wildcat Partner Holdings, LP at a price of $7.00 per share, for a total purchase price of $6.7 million and 18,316 shares of its Class A Common Stock from Wildcat Capital Management, LLC at a price of $7.00 per share, for a total purchase price of $0.1 million (b) In August 2023, our Board of Directors approved a share repurchase authorization for up to $65.0 million of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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The Company and Big Run collectively received $50.0 million from AviaGames pursuant to the settlement agreement. Of the $50.0 million received, Skillz received $48.0 million, $2.0 million of which was for settlement of the amount outstanding under the Loan and Security Agreement with Big Run.
The Company and Big Run collectively received $50.0 million from AviaGames pursuant to the settlement agreement. Of the $50.0 million received, Skillz received $48.0 million, $2.0 million of which was for settlement of the amount outstanding under the a loan and security agreement with Big Run.
Over the course of the fiscal years ending December 31, 2024 and 2023, our focus was on driving higher efficiency from our marketing investment by (1) reducing spend on low-return engagement marketing programs, which we expect will result in lower engagement marketing as a percentage of revenue and (2) driving UA efficiency by optimizing spend across networks, and driving higher organic traffic.
Over the course of the fiscal years ending December 31, 2025 and 2024, our focus was on driving higher efficiency from our marketing investment by (1) reducing spend on low-return engagement marketing programs, which we expect will result in lower engagement marketing as a percentage of revenue and (2) driving UA efficiency by optimizing spend across networks, and driving higher organic traffic.
Adjusted EBITDA “Adjusted EBITDA” is defined as net income (loss), excluding interest income (expense), net; change in fair value of common stock warrant liabilities; other income (expense), net; provision for (benefit from) income taxes; depreciation and amortization; stock-based compensation expense and related payroll tax expense; and certain other non-cash or non-recurring items impacting net loss from time to time, including, but not limited to charges related to impairment of goodwill and long-lived assets, litigation accruals, loss contingency accruals, gains on extinguishment of debt, gains from litigation settlements, restructuring charges and one-time nonrecurring expenses, as they are not indicative of business operations.
Adjusted EBITDA “Adjusted EBITDA” is defined as net loss, excluding interest expense (income), net; change in fair value of common stock warrant liabilities; other (expense) income, net; provision for income taxes; depreciation and amortization; stock-based compensation; and certain other non-cash or non-recurring items impacting net loss from time to time, including, but not limited to charges related to impairment of goodwill and long-lived assets, litigation accruals, loss contingency accruals, gains on extinguishment of debt, gains from litigation settlements, restructuring charges and one-time nonrecurring expenses, as they are not indicative of business operations.
Via the DSP, if the Company wins the auction and an impression is served, the customer’s advertisement is displayed on the publisher or supplier’s mobile application. Management evaluates whether the performance obligation contained in its insertion order (“IO”) is distinct within the context of a customer contract as defined above.
If the Company wins the auction and an impression is served, the customer’s advertisement is displayed on the publisher or supplier’s mobile application. Management evaluates whether the performance obligation contained in its insertion order (“IO”) is distinct within the context of a customer contract as defined above.
We used the net proceeds from the offering for general corporate purposes. The notes contain customary covenants restricting our and certain of our subsidiaries’ ability to incur debt, incur liens, make distributions to holders of our stock, make certain transactions with our affiliates, as well as certain financial covenants specified in the indentures.
We used the net proceeds from the offering for general corporate purposes. The notes contain customary covenants restricting our and certain of our subsidiaries’ ability to incur debt, incur liens, make distributions to holders of our stock, enter into certain transactions with our affiliates, as well as certain financial covenants specified in the indentures.
For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.
For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the year ended December 31, 2024.
If these games were to become less popular or be removed from our platform and we are unable to identify and market suitable replacements, our business and prospects could suffer ” in Part I, Item 1A, Risk Factors of this Annual Report on Form 10-K for additional information on risks related to Tether’s Notice.
If these games were to become less popular or be removed from our platform and we are unable to identify and market suitable replacements, our business and prospects could suffer ” in Part I, Item 1A, Risk Factors of this Annual Report for additional information on risks related to Tether’s Notice.
General and Administrative General and administrative expenses consist of personnel-related expenses for our corporate, executive, legal, accounting, finance, people operations and other administrative functions, expenses for outside professional services, and an allocation for rent, maintenance and utilities costs, which are allocated based on headcount. Personnel related expenses consist of salaries, benefits, and stock-based compensation.
General and Administrative General and administrative expenses consist of personnel-related expenses for our corporate, executive, legal, accounting, finance, people operations and other administrative functions, expenses for outside professional services, and an allocation for 51 TABLE OF CONTENTS rent, maintenance and utilities costs, which are allocated based on headcount. Personnel related expenses consist of salaries, benefits, and stock-based compensation.
(8) Amount reflects the average end-user incentives included in sales and marketing expenses in a given month divided by PMAUs in that month, averaged over the period. (9) Amount reflects the average end-user incentives included in sales and marketing expenses in a given month divided by MAUs in that month, averaged over the period.
(8) Amount reflects the average end-user incentives included in sales and marketing expense in a given month divided by PMAUs in that month, averaged over the period. (9) Amount reflects the average end-user incentives included in sales and marketing expense in a given month divided by MAUs in that month, averaged over the period .
The SDK and Skillz monetization services provide the following key benefits to the developers: • Streamlined game and tournament management allowing players to register with the developer to compete in games for prizes while earning Skillz loyalty perks; • Fair play in each tournament via the Skillz suite of fairness tools, including skill-based player matching and fraud monitoring; • Improved end-user retention by rewarding the most loyal players with Ticketz which can be redeemed in the Skillz virtual store and are earned in qualifying matches and can be redeemed for prizes or credits to be used towards future paid entry fee tournaments; • Marketing campaigns through main-stream online advertising networks and social media platforms to drive end-user traffic to developers’ games within the Skillz ecosystem; • Systematic calls to end-user action via push notifications to users with game results, promotional offers, and time-sensitive actions; and • Process end-user payments, billings and settlements on behalf of the developer to enable players to connect their preferred payment method to deposit and enter into the game developers’ multi-player competitions for cash prizes. 54 TABLE OF CONTENTS Generally, end-users are required to deposit funds into their Skillz account in order to be eligible to participate in games for prizes.
The SDK and Skillz monetization services provide the following key benefits to the developers: • Streamlined game and tournament management allowing players to register with the developer to compete in games for prizes while earning Skillz loyalty perks; • Fair play in each tournament via the Skillz suite of fairness tools, including skill-based player matching and fraud monitoring; • Improved end-user retention by rewarding the most loyal players with Ticketz which can be redeemed in the Skillz virtual store and are earned in qualifying matches and can be redeemed for prizes or credits to be used towards future paid entry fee tournaments; • Marketing campaigns through main-stream online advertising networks and social media platforms to drive end-user traffic to developers’ games within the Skillz ecosystem; • Systematic calls to end-user action via push notifications to users with game results, promotional offers, and time-sensitive actions; and • Process end-user payments, billings and settlements on behalf of the developer to enable players to connect their preferred payment method to deposit and enter into the game developers’ multi-player competitions for cash prizes.
Likewise, if Bonus Cash is returned to an end-user and is used to enter subsequent competitions, which they continue to win, we do not record any additional sales and marketing expenses or reductions to revenue. • Marketing promotions and discounts accounted for as reductions to revenue.
Likewise, if Bonus Cash is returned to an end-user and is used to enter subsequent competitions, which they continue to win, we do not record any additional sales and marketing expenses or reductions to revenue. 56 TABLE OF CONTENTS • Marketing promotions and discounts accounted for as reductions to revenue.
This section generally discusses the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
This section generally discusses the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024.
MD&A is provided as a supplement and should be read in conjunction with the consolidated financial statements and related notes included in Part II, Item 8, “Financial Statements and Supplementary Data”, of this Annual Report on Form 10-K.
MD&A is provided as a supplement and should be read in conjunction with the consolidated financial statements and related notes included in Part II, Item 8, “Financial Statements and Supplementary Data”, of this Annual Report.
We are currently unable to reasonably estimate the quantitative impact, or range of impact, that reductions in UA marketing and engagement marketing will have on forward-looking revenue as a result of the number of interrelated factors impacting revenue, including, but not limited to, retention of existing users on the platform, ARPPU, efficacy of various engagement marketing programs on existing users, elasticity of the digital advertising supply curve, and impact of varying levels of player liquidity on the existing user ecosystem.
We are currently unable to reasonably estimate the quantitative impact, or range of impact, that reductions in UA marketing will have on forward-looking revenue as a result of the number of interrelated factors impacting revenue, including, but not limited to, retention of existing users on the platform, average revenue per paying monthly active user, efficacy of various marketing programs on existing users, elasticity of the digital advertising supply curve, and impact of varying levels of player liquidity on the existing user ecosystem.
(2) “Paying Monthly Active Users” or “PMAUs” represent 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.
(2) “Paying Monthly Active Users” or “PMAUs” means the number of end-users who entered into a paid contest hosted on Skillz’ platform at least once in a month, averaged over each month in the period.
Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in accordance with GAAP.
Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP.
After giving effect to the September 1, 2022 and the 2023 open market repurchases of our senior secured notes, as of December 31, 2024, $129.7 million of the senior secured notes remained outstanding. We were in compliance with all covenants applicable to our secured notes as of December 31, 2024 and 2023.
After giving effect to open market repurchases of our senior secured notes, $129.7 million of the senior secured notes remained outstanding as of December 31, 2025. We were in compliance with all covenants applicable to our secured notes as of December 31, 2025 and 2024.
The Company considers itself the agent of its customer(s). This is due to the Company’s involvement in programmatically placing and sourcing advertisements on behalf of customers via a network of third party publishers. The Company does not, at any time, take ownership of advertising inventory being sourced and placed.
This is due to the Company’s involvement in programmatically placing and sourcing advertisements on behalf of customers via a network of third party publishers. The Company does not, at any time, take ownership of advertising inventory being sourced and placed.
The Company has indirect tax liabilities totaling $14.9 million and $11.2 million as of December 31, 2024 and 2023, respectively, associated with indirect taxes based on currently available information and assumptions that the Company believes are reasonable based on an evaluation of relevant factors.
The Company has indirect tax liabilities totaling $12.6 million and $14.9 million as of December 31, 2025 and 2024, respectively, associated with indirect taxes based on currently available information and assumptions that the Company believes are reasonable based on an evaluation of relevant factors.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Annual Report.
Total entry fees include entry fees paid by end-users using cash depo sits, prior winnings from en d-users’ accounts that have not been withdrawn and end-user incentives used to enter paid entry fee contests.
Total entry fees include entry fees paid by end-users using cash deposits, prior winnings from end-users’ accounts that have not been withdrawn, and end-user incentives used to enter paid entry fee contests.
When Bonus Cash is used towards entry fees for a paid Competition and is returned to an end-user as winnings, we do not record any additional sales and marketing expenses or reductions to revenue.
We recognize the cost of Bonus Cash as sales and marketing expenses or a reduction of revenue (as discussed below). When Bonus Cash is used towards entry fees for a paid Competition and is returned to an end-user as winnings, we do not record any additional sales and marketing expenses or reductions to revenue.
The determination of a valid expectation is based on an evaluation of all information reasonably available to game developers regarding the Company’s customary business practices, published policies and specific statements.
The determination of a valid expectation is based on an evaluation of all information reasonably available to game developers regarding the Company’s customary business practices, published policies and specific statements. • Marketing promotions accounted for as sales and marketing expenses.
Our operating cash flows are also affected by working capital needs to support growth in personnel-related expenditures and fluctuations in accounts payable and other current assets and liabilities. Net cash used in operating activities was $7.1 million for the year ended December 31, 2024.
Our operating cash flows are also affected by working capital needs to support growth in personnel-related expenditures and fluctuations in accounts payable and other current assets and liabilities. Net cash used in operating activities was $68.9 million for the year ended December 31, 2025, which was primarily due to changes in operating assets and liabilities.
(7) “Average Revenue Per Monthly Active User” or “ARPU” represents the average revenue in a given month divided by MAUs in that month, averaged over the period and does not include a deduction for end-user incentives, which are included in sales and marketing expenses.
(7) “Average Revenue per MAU” or “ARPU” means the average revenue in a given month divided by MAUs in that month, averaged over the period and does not include a deduction for end-user incentives that are included in sales and marketing expense.
The SDK serves as a data interface between Skillz and the game developers that enables Skillz to provide monetization services to the developer. Specifically, thes e monetization services include end-user registration services, player matching, fraud and fair play monitoring, and billing and settlement services.
Skillz provides developers with an SDK that they can download and integrate with their existing games. The SDK serves as a data interface between Skillz and the game developers that enables Skillz to provide monetization services to the developer. Specifically, thes e monetization services include end-user registration services, player matching, fraud and fair play monitoring, and billing and settlement services.
End-User Incentive Programs To drive traffic to the platform, the Company provides promotions and incentives to end-users in various forms, including Ticketz and Bonus Cash. Evaluating whether a promotion or incentive is a payment to a customer may require significant judgment.
Actual results may differ from these estimates under different assumptions or conditions. End-User Incentive Programs To drive traffic to the platform, the Company provides promotions and incentives to end-users in various forms, including Ticketz and Bonus Cash. Evaluating whether a promotion or incentive is a payment to a customer may require significant judgment.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, in Part II, Item 8 of this Annual Report for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.
The following table provides a summary of cash flow data (in thousands): Year Ended December 31, 2024 2023 Net cash used in operating activities $ (7,074) $ (71,758) Net cash (used in) provided by investing activities $ (1,377) $ 168,301 Net cash used in financing activities $ (21,654) $ (149,951) Cash Flows from Operating Activities Our cash flows from operating activities are significantly affected by the growth of our business primarily related to research and development, sales and marketing, and general and administrative activities.
The following table provides a summary of cash flow data (in thousands): Year Ended December 31, 2025 2024 Net cash used in operating activities $ (68,927) $ (7,074) Net cash used in investing activities $ (6,137) $ (1,377) Net cash used in financing activities $ (10,975) $ (21,654) Cash Flows from Operating Activities Our cash flows from operating activities are significantly affected by the growth of our business primarily related to research and development, sales and marketing, and general and administrative activities.
Beginning in March of 2025, AviaGames is required to pay Skillz an additional $7.5 million annually over a four-year period as royalty payments for AviaGames’ license of the applicable patent and its patent family; no portion of these payments are due to Big Run (see Note 5, Balance Sheet Components and Note 10, Commitments and Contingencies).
AviaGames is required to pay Skillz an additional $7.5 million annually over a four-year period as royalty payments for AviaGames’ license of the applicable patent and its patent family; no portion of these payments are due to Big Run.
For the year ended December 31, 2024, the platform had over 816 thousand monthly active users (“MAUs”) and hosted an average of over 1.1 million daily tournaments, including an average of approximately 405 thousand paid entry daily tournaments, offering over $41.2 million in prizes each month. Our technological capabilities provide the tools necessary for developers to compete in the marketplace.
For the year ended December 31, 2025, the platform had approximately 0.7 million monthly active users (“MAUs”) and hosted an average of over 0.8 million daily tournaments, including an average of approximately 0.4 million paid entry daily tournaments, offering over $37.0 million in prizes each month. Our technological capabilities provide the tools necessary for developers to compete in the marketplace.
By monetizing through competition, our system eliminates friction that exists in traditional monetization models between the developer and the gamer. The more gamers enjoy our platform, the longer they play, creating more value for Skillz and our developers.
Our Financial Model Skillz’s financial model is intended to align the interests of gamers and developers, driving value for our stockholders. By monetizing through competition, our system eliminates friction that exists in traditional monetization models between the developer and the gamer. The more gamers enjoy our platform, the longer they play, creating more value for Skillz and our developers.
End-user incentives for which game developers do not have a valid expectation of being offered to end-users to engage on the platform, such as limited-time Bonus Cash offers, are accounted for as a sales and marketing expense. Refer to Note 2, Summary of Significant Accounting Policies, of our consolidated financial statements for further information.
End-user incentives for which game developers do not have a valid expectation of being offered to end-users to engage on the platform, such as limited-time Bonus Cash offers, are accounted for as a sales and marketing expense.
The total principal amount of $129.7 million, gross of discount and issuance costs, net, is due on December 15, 2026 (see Note 8 Long-Term Debt for additional information).
The total principal amount of $129.7 million, gross of discount and issuance costs, net, is due on December 15, 2026 (see Note 7, Long-Term Debt, in Part II, Item 8 of this Annual Report).
(6) “Average Revenue Per Paying Monthly Active User” or “ARPPU” represents the average revenue in a given month divided by Paying MAUs in that month, averaged over the period and does not include a deduction for end-user incentives, which are included in sales and marketing expenses.
(6) “Average Revenue per PMAU” or “ARPPU” means the average revenue in a given month divided by PMAUs in that month, averaged over the period and does not include a deduction for end-user incentives that are included in sales and marketing expense .
In exchange for mutual releases of all claims, the Company paid the vendor $2.75 million in March 2025, $2.75 million of which has been accrued for in fiscal year 2024, (see Note 19, Subsequent Events). • A vendor and the Company agreed to mediate a dispute that resulted in a settlement where the Company agreed to pay the vendor $533 thousand, which represented the past due balances for year one and year two of the agreement that were fully accrued as of December 31, 2024 (see Note 19, Subsequent Events). • The Company and a lessor of its former headquarters in San Francisco mutually agreed to terminate a lease.
In exchange for mutual releases of all claims, the Company paid the vendor $2.8 million that was fully accrued as of December 31, 2024 (see Note 9, Commitments and Contingencies, in Part II, Item 8 of this Annual Report). • During fiscal year 2025, the Company and a vendor agreed to mediate a dispute that resulted in a settlement where the Company agreed to pay the vendor $0.5 million, which represented the past due balances for year one and year two of the agreement that were fully accrued as of December 31, 2024 (see Note 9, Commitments and Contingencies, in Part II, Item 8 of this Annual Report). • During fiscal year 2025, the Company and a lessor of its former headquarters in San Francisco mutually agreed to terminate a lease.
Skillz is entitled to a revenue share based on total entry fees for paid competitions, regardless of how they are paid, net of end-user prizes (i.e., winnings from the competitions) and other costs to provide monetization services. Revenue related to Bonus Cash is recognized only once when the Bonus Cash is lost.
Skillz is entitled to a revenue share based on total entry fees for paid competitions, regardless of how they are paid, net of end-user prizes (i.e., winnings from the competitions) and other costs to provide monetization services. Skillz typically withholds 16% to 20% of the total entry fees when distributing the prize money as a commission.
If we are unable to negotiate new terms with Tether or, as applicable with other developers, or if any new terms are less favorable to us, or if our litigation against Tether is unsuccessful, and these games were to be removed from our platform and we are unable to identify and market suitable replacements, there may be a material adverse effect on our business and results of operations Following receipt of the Notice, on September 1, 2025, we filed suit in the Court of Chancery of the State of Delaware, seeking injunctive and declaratory relief in relation to Tether’s breach of the Tether Agreements.
If we are unable to negotiate new terms with Tether or, as applicable with other developers, or if any new terms are less favorable to us, or if our litigation against Tether is unsuccessful, and these games were to be removed from our platform and we are unable to identify and market suitable replacements, there may be a material adverse effect on our business and results of operations.
(4) “Average GMV Per Paying Monthly Active User” represents the average GMV in a given month divided by Paying MAUs in that month, averaged over the period. (5) “Average GMV Per Monthly Active User” represents the average GMV in a given month divided by MAUs in that month, averaged over the period.
(5) “Average GMV per MAU” means the average GMV in a given month divided by MAUs in that month, averaged over the period.
Our end-to-end platform allows developers to focus on creating games by automating and optimizing integral parts of their businesses — from user acquisition and monetization to game optimization.
Scale, growth and partnership of our developers We have created a platform that drives economic success for our developers. Our end-to-end platform allows developers to focus on creating games by automating and optimizing integral parts of their businesses — from user acquisition and monetization to game optimization.
(3) “Monthly Active Users” or “MAUs” represent the number of playing end-users who entered into a paid or free contest hosted on our platform at least once in a month, averaged over each month in the period.
(3) “Monthly Active Users” or “MAUs” means the number of playing end-users who entered into a paid or free contest hosted on Skillz’ platform at least once in a month, averaged over each month in the period. (4) “Average GMV per PMAU” means the average GMV in a given month divided by PMAUs in that month, averaged over the period.
The Court of Appeals also affirmed the dismissal of the wrongful termination and retaliation claims, holding that stock options are not wages. The Court of Appeal’s decision became final, non-appealable and enforceable. • A vendor and the Company settled a dispute.
The Court of Appeals also affirmed the dismissal of the wrongful termination and retaliation claims, holding that stock options are not wages. The Court of Appeal’s decision became final, non-appealable and enforceable. The amount was fully satisfied during fiscal year 2024.
Personnel related expenses consist of salaries, benefits, and stock-based compensation. We expect research and development expenses will fluctuate both in terms of absolute dollars and as a percentage of revenue in the future.
Sales and marketing expenses also include allocations based on headcount of rent, maintenance and utilities costs. Personnel related expenses consist of salaries, benefits, and stock-based compensation. We expect sales and marketing expenses will fluctuate both in terms of absolute dollars and as a percentage of revenue in the future.
The following are key elements of our financial model: 53 TABLE OF CONTENTS • The scale, growth and engagement of the users — As we continue to acquire users, our ability improves to match comparable players, on both skill level and tournament template, in a fair and timely manner.
Refer to Note 2, Summary of Significant Accounting Policies, in Part II, Item 8 of this Annual Report for further information. 47 TABLE OF CONTENTS The following are key elements of our financial model: Scale, growth and engagement of the users As we continue to acquire users, our ability improves to match comparable players, on both skill level and tournament template, in a fair and timely manner.
Key Components of Results of Operations Revenue We generate revenue from our two reportable operating segments, Skillz and Aarki. Skillz Revenue Sk illz provides a service to the game developers aimed at improving the monetization of their game content. The monetization service provided by Skillz allows developers to offer multi-player competition to their end-users which increases end-user retention and engagement.
Key Components of Results of Operations Revenue We generate revenue from our two reportable operating segments, Skillz and RZR. Skillz Revenue Sk illz provides a service to the game developers aimed at improving the monetization of their game content.
Trends and Developments Impacting our Business Trends Engagement marketing is a sales and marketing expense representing rewards and awards that developers do not have a valid expectation of being offered to end-users to engage on our platform.
Trends and Developments Impacting our Business Trends Engagement marketing is a sales and marketing expense representing rewards and awards that developers do not have a valid expectation of being offered to end-users to engage on our platform. Engagement marketing may be impacted by end-user incentives, which include Bonus Cash that could only be used to enter into paid contests.
During the year ended December 31, 2024, the Company recorded a gain from the Litigation Settlement netting $46.0 million consisting of the gross payment of $48.0 million less the $2.0 million received for satisfaction and settlement of the Loan and Security Agreement.
T he Company recorded a gain from the Litigation Settlement netting to $46.0 million c onsisting of the gross payment of $48.0 million less the 46 TABLE OF CONTENTS $2.0 million received for satisfaction and settlement of the loan and security agreement.
As the successor to Flying Eagle, the defendant in the De-SPAC litigation, Skillz is obligated to indemnify and pay legal costs of the Individual D&O Defendants of Flying Eagle in their capacities as such in connection with this action and, as such recorded an expense of $10 million, offset by the insurance proceeds of $9.75 million, which is reflected in general and administrative expenses for the year ended December 31, 2024.
As the successor to Flying Eagle, the defendant in the De-SPAC litigation, Skillz is obligated to indemnify and pay legal costs of the Individual D&O Defendants of Flying Eagle in their capacities as such in connection with this action and, as such recorded an expense of $10.0 million, which is reflected in general and administrative expense for the year ended December 31, 2024 (see Note 9, Commitments and Contingencies, in Part II, Item 8 of this Annual Report). • During fiscal year 2025, the Company filed suit against its insurance carrier for D&O insurance coverage in connection with the Company’s De-SPAC litigation.
A cohort is all the users acquired in the period presented. A user is considered part of a cohort based on the first time they make a deposit and enter a paid tournament. Once a user is considered part of a cohort, they are always counted in that cohort.
A user is considered part of a cohort based on the first time they make a deposit and enter a paid tournament.
Our key data science technologies drive our player rating and matching, anti-cheat and anti-fraud, and user experience personalization engine. • Our unit economics — Our proprietary and highly scalable software platform produces revenue at a low direct cost (i.e. direct software and server costs), contributing to our gross margins. Once acquired, each user cohort contributes to revenue over its life.
Our unit economics Our proprietary and highly scalable software platform produces revenue at a low direct cost (i.e. direct software and server costs), contributing to our gross margins. Once acquired, each user cohort contributes to revenue over its life. A cohort is all the users acquired in the period presented.
The notes were sold in a private placement to qualified institutional buyers. Annual interest started to accrue from December 20, 2021 at a stated rate of 10.25% and is payable semiannually on June 15 and December 15 of each year, beginning on June 15, 2022. The notes mature on December 15, 2026.
During fiscal year 2021, the Company offered $300.0 million in aggregate principal senior secured notes due 2026. The notes were sold in a private placement to qualified institutional buyers. Interest accrues at an annual interest rate is 10.25% and is payable semiannually on June 15 and December 15 of each year. The notes mature on December 15, 2026.
Cash Flows from Financing Activities Net cash used in financing activities was $21.7 million for the year ended December 31, 2024, which was primarily due to $19.3 million for the repurchase of common stock and net proceeds from exercise of common stock options and issuance of common stock of $1.4 million.
Cash Flows from Investing Activities Net cash used in investing activities was $6.1 million for the year ended December 31, 2025, which was primarily due to $4.7 million of capitalized software development costs and $1.4 million for purchases of property and equipment. 55 TABLE OF CONTENTS Cash Flows from Financing Activities Net cash used in financing activities was $11.0 million for the year ended December 31, 2025, which was primarily due to $9.3 million for repurchases of common stock and $1.3 million of payments for net proceeds from the exercise of common stock options and issuance of common stock.
Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources (see Note 2, Summary of Significant Accounting Policies, in Part II, Item 8 of this Annual Report for additional information).
We expect sales and marketing expenses will fluctuate both in terms of absolute dollars and as a percentage of revenue in the future.
We expect research and development expenses will fluctuate both in terms of absolute dollars and as a percentage of revenue in the future. Sales and Marketing Sales and marketing expenses consist primarily of direct advertising costs, engagement marketing expenses that are not recorded as a reduction of revenue, and UA marketing expenses.
UA marketing spend during fiscal year 2024 was approximately $18.4 million, as compared to approximately $29.4 million in fiscal year 2023. The reduction in UA marketing and engagement marketing expenses in fiscal year ending December 31, 2024 compared to 2023 has resulted in a substantial reduction in revenue and is expected to continue to result in a reduction in revenue.
The reduction in UA marketing expenses in fiscal year ending December 31, 2025 compared to 2024 has resulted in a 45 TABLE OF CONTENTS reduction in revenue and is expected to continue to result in a reduction in revenue.
By utilizing the Skillz monetization services, game developers can enhance the player experience by enabling them to compete in head-to-head matches, live tournaments and leagues and increase player retention through referral bonus programs, loyalty perks, on-system achievements and Bonus Cash. Skillz provides developers with a SDK that they can download and integrate with their existing games.
The monetization service provided by Skillz allows developers to offer multi-player competition to their end-users, which increases retention and engagement. 49 TABLE OF CONTENTS By utilizing the Skillz monetization services, game developers can enhance the player experience by enabling them to compete in head-to-head matches, live tournaments and leagues and increase player retention through referral bonus programs, loyalty perks, in-system achievements and Bonus Cash.
We collect hundreds of data points during each gameplay session to feed our big data assets which augment all elements of our platform.
We collect hundreds of data points during each gameplay session to feed our big data assets which augment all elements of our platform. Our key data science technologies drive our player rating and matching, anti-cheat and anti-fraud, and user experience personalization engine.
Accordingly, we believe that they provide helpful supplemental information to investors in evaluating our operating results. 49 TABLE OF CONTENTS Year Ended December 31, 2024 2023 Gross marketplace volume (“GMV”) (000s) (1) $ 608,248 $ 963,580 Paying monthly active users (“PMAUs”) (000s) (2) 118 179 Monthly active users (“MAUs”) (000s) (3) 816 1,045 Average GMV per paying monthly active user (4) $ 429.6 $ 448.8 Average GMV per monthly active user (5) $ 62.1 $ 76.9 Average revenue per paying monthly active user (“ARPPU”) (6) $ 66.6 $ 70.0 Average revenue per monthly active user (“ARPU”) (7) $ 9.6 $ 11.9 Paying MAU to MAU ratio 14 % 17 % Average end-user incentives, included as sales and marketing expense, per paying active user (8) $ 25.94 $ 30.09 Average end-user incentives, included as sales and marketing expenses, per playing active user (9) $ 3.76 $ 5.15 (1) “GMV” or “Gross Marketplace Volume” represents the total entry fees paid by users for contests hosted on Skillz’s platform.
Once a user is considered part of a cohort, they are always counted in that cohort. 48 TABLE OF CONTENTS The following supplemental financial information summarizes key operating metrics for the years ended December 31, 2025 and 2024: Year Ended December 31, 2025 2024 Gross marketplace volume (“GMV”) (000s) (1) $ 541,853 $ 608,248 Paying monthly active users (“PMAUs”) (000s) (2) 141 118 Monthly active users (“MAUs”) (000s) (3) 658 816 Average GMV per PMAU (4) $ 319.8 $ 429.6 Average GMV per MAU (5) $ 68.7 $ 62.1 Average revenue per PMAU (“ARPPU”) (6) $ 61.7 $ 66.6 Average revenue per MAU (“ARPU”) (7) $ 13.2 $ 9.6 PMAU to MAU ratio 21 % 14 % Average end-user incentives, included as sales and marketing expense, per PMAU (8) $ 20 $ 26 Average end-user incentives, included as sales and marketing expenses, per MAU (9) $ 4 $ 4 (1) “Gross Marketplace Volume” or “GMV” means the total entry fees paid by users for contests hosted on Skillz’ platform.
We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively with GAAP financial information, may be helpful to investors in assessing our operating performance.
Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes.
This creates a stickier, more engaging, and continuously improving experience for our players, which in turn attracts more players to our platform, creating a positively reinforcing cycle leading to ever-improving gaming experiences. • The scale, growth and partnership of our developers — We have created a platform that drives economic success for our developers.
Better matching leads to stronger engagement and the ability to create larger tournaments with more profitable take rates. This creates a stickier, more engaging, and continuously improving experience for our players, which in turn attracts more players to our platform, creating a positively reinforcing cycle leading to ever-improving gaming experiences.
We also incur costs related to the amortization of intangible assets related to developed technology directly used to produce the Company's products or services. 55 TABLE OF CONTENTS Research and Development Research and development expenses consist of software development costs, composed mainly of product and platform development, server and software costs that support research and development activities, and to a lesser extent, allocation of rent, maintenance and utilities costs according to headcount.
Research and Development Research and development expenses consist of software development costs, composed mainly of product and platform development, server and software costs that support research and development activities, and to a lesser extent, allocation of rent, maintenance and utilities costs according to headcount. Personnel related expenses consist of salaries, benefits, and stock-based compensation.
These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP.
We believe that non-GAAP financial information, when taken collectively with GAAP financial information, may be helpful to investors in assessing our operating performance. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP.
Items Impacting Comparability of Results of Operations and Financial Condition Our Financial Statements included in this report reflect the following additional items impacting the comparability of results of operations and financial condition during the fiscal year 2024: • In connection with a dispute with a former employee, the Court of Appeals issued its decision, affirming the judgment of $4.4 million, with an additional $2.3 million for a total award of $6.7 million.
In exchange for the mutual releases, the Company paid the lessor a lump sum payment of $14.0 million (see Note 9, Commitments and Contingencies, in Part II, Item 8 of this Annual Report). • During fiscal year 2024, the Court of Appeals issued its decision, affirming the judgment of $4.4 million, with an additional $2.3 million for a total award of $6.7 million in connection with a dispute with a former employee.
See the risk factor entitled “ Historically, a limited number of games have accounted for a substantial portion of our revenue.
We intend to defend our position, but can provide no assurances regarding the outcome of the claim and the impact it may have on our business. See the risk factor entitled “ Historically, a limited number of games have accounted for a substantial portion of our revenue.
The Company accounts for credits or refunds, which are not recoverable from the game developer, as sales and marketing expenses when incurred. 64 TABLE OF CONTENTS Indirect Tax Liabilities The Company is subject to indirect taxes, including sales and use tax in the United States and value-add tax in certain foreign jurisdictions that require management to make various estimates.
These promotions are offered to end-users to draw, re-engage, or generally increase their use of the Skillz platform. Indirect Tax Liabilities The Company is subject to indirect taxes, including sales and use tax in the United States and value-add tax in certain foreign jurisdictions that require management to make various estimates.
The parties involved with the De-SPAC litigation executed a term sheet to settle the action in principle for $10 million, subject to completing settlement documentation and obtaining court approval.
During fiscal year 2025, the Company recorded a gain from the Litigation Settlement of $7.5 million when payment was received (see Note 9, Commitments and Contingencies, in Part II, Item 8 of this Annual Report). • During fiscal year 2024, the parties involved with the De-SPAC litigation executed a term sheet to settle the action in principle for $10.0 million, subject to completing settlement documentation and obtaining court approval.
Refer to Note 10, Commitments and Contingencies, of the notes to the consolidated financial statements for further discussion. Segment Results We have two reportable business segments: Skillz and Aarki. We evaluate the performance of our segments based on revenue and Adjusted EBITDA to assess operational performance and identify actions required to improve profitability.
General and administrative expenses also include expenses related to loss contingency accruals for pending legal matters, as applicable. Segments We have two reportable business segments: Skillz and RZR. We evaluate the performance of our segments based on revenue and adjusted EBITDA to assess operational performance and identify actions required to improve profitability.
Leases We have operating lease arrangements for office space, and finance lease agreements for certain network equipment. As of December 31, 2024, we had lease payment obligations of $15.1 million, with $3.2 million payable within 12 months (see Note 9, Leases for additional information). Long-Term Debt The Company’s long-term debt consists of the 2021 Senior Secured Notes.
As of December 31, 2025, we had lease payment obligations of $1.3 million, with $0.6 million payable within 12 months (see Note 8, Leases, in Part II, Item 8 of this Annual Report). Long-Term Debt The Company’s long-term debt consists of the senior secured notes due in 2026.
Promotions and incentives recorded as sales and marketing expenses are recognized when we incur the related cost. 63 TABLE OF CONTENTS Our primary end-user incentive is Bonus Cash, which is a promotional incentive that cannot be withdrawn and can only be used by end-users to enter paid-entry fee contests.
Our primary end-user incentive is Bonus Cash, which is a promotional incentive that cannot be withdrawn and can only be used by end-users to enter paid-entry fee contests. Bonus Cash used as entry fees for paid Competitions (as defined below) can include newly issued Bonus Cash or Bonus Cash returned to end-users from prior winnings.
Liquidity and Capital Resources As of December 31, 2024, our principal sources of liquidity were our cash and cash equivalents in the amount of $271.9 million, which are primarily invested in money market funds with maturity less than three months. In December 2021, the Company offered $300.0 million in aggregate principal senior secured notes due 2026 in a private offering.
Refer to Note 9, Commitments and Contingencies, in Part II, Item 8 of this Annual Report. Liquidity and Capital Resources As of December 31, 2025, our principal sources of liquidity are our cash and cash equivalents in the amount of $194.5 million, which are primarily invested in money market funds with maturities of less than three months.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Overview We operate a marketplace that connects the world through competition, serving both developers and users.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Overview We were founded on one simple belief: competition holds the power to unleash possibilities in all of us.
The loss on termination of the operating lease of $0.4 million represented the difference between the settlement amount and the carrying value of the lease obligation and was recorded during the fiscal year 2024. • A federal jury in San Jose, California issued a verdict in favor of Skillz in a patent infringement action Skillz brought against a privately-held mobile gaming company, AviaGames (“Patent Case”).
Items Impacting Comparability of Results of Operations and Financial Condition Our consolidated financial statements included in this report reflect the following additional items impacting the comparability of results of operations and financial condition during the fiscal year 2025 to those during fiscal year 2024: • During fiscal year 2024, a federal jury in San Jose, California issued a verdict in favor of Skillz in a patent infringement action Skillz brought against a privately-held mobile gaming company, AviaGames (“Patent Case”).
This was primarily due to a book loss, state taxes and equity award activities, mostly offset by a full valuation allowance on our deferred tax assets. Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance.
This was primarily due to a book loss, state taxes and equity award activities, mostly offset by a full valuation allowance on our deferred tax assets. Primarily as a result of the factors described above, we had a net loss of $70.4 million in 2025, as compared to a net loss of approximately $46.8 million in 2024.
The removal of Solitaire Cube and 21 Blitz contrary to the terms set forth in the agreements and/or before Skillz can provide a suitable replacement to such games may cause a material adverse effect on our platform business and results of operations Extension for Continued Listing on the New York Stock Exchange On April 2, 2025, we received a notice from the NYSE indicating that we are not in compliance with the NYSE’s continued listing requirements under the timely filing criteria outlined in Section 802.01E of the NYSE Listed Company Manual as a result of our failure to timely file this Annual Report on Form 10-K.
The removal of Solitaire Cube and 21 Blitz contrary to the terms set forth in the agreements and/or before Skillz can provide a suitable replacement to such games may cause a material adverse effect on our platform business and results of operations.
Aarki Revenue Thru its Aarki segment, the Company offers a technology platform (i.e. demand side platform, “DSP”) to source available advertising space from its network of vendors and suppliers, which uses a real-time auction process. The revenue from advertising is recognized over time based on the number of impressions as the performance obligation is satisfied.
To the extent we reduce engagement marketing spend, we expect to reduce our Bonus Cash end-user incentives in proportion to such overall engagement marketing reduction. 50 TABLE OF CONTENTS RZR Revenue RZR offers a technology platform (i.e. demand side platform, “DSP”) to source available advertising space from its network of vendors and suppliers, which uses a real-time auction process.
We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA on a supplemental basis. 58 TABLE OF CONTENTS The following table reconciles net loss to Adjusted EBITDA for the periods indicated (in thousands): Year Ended December 31, 2024 2023 Net loss $ (46,790) $ (101,360) Interest (income) expense, net (298) 2,852 Provision for income taxes 66 239 Depreciation and amortization 1,665 1,961 Stock-based compensation 30,015 43,692 Change in fair value of common stock warrant liabilities (11) (278) Gain on extinguishment of debt — (15,205) Impairment of goodwill and long-lived assets (1) — 3,335 Loss contingency accrual (2) — (3,524) Gain from litigation settlement (3) (46,000) — Other expense (income) 530 (540) Adjusted EBITDA $ (60,823) $ (68,828) (1) For the year ended 2023, amount includes impairment of goodwill and long-lived assets.
The following table reconciles net loss to Adjusted EBITDA for the periods indicated (in thousands): Year Ended December 31, 2025 2024 Net loss $ (70,408) $ (46,790) Interest expense (income), net 5,815 (298) Provision for income taxes 108 66 Depreciation and amortization 1,381 1,665 Stock-based compensation 19,580 30,015 Change in fair value of common stock warrant liabilities — (11) Gain from litigation settlement (1) (7,500) (46,000) Other expense (income) 567 530 Adjusted EBITDA $ (50,457) $ (60,823) 54 TABLE OF CONTENTS (1) Represents a gain on legal settlement recorded in connection with proceeds received under the terms of a settlement agreement entered into with AviaGames in connection with certain bot misuse litigation.
The Court also denied Papaya’s motion to exclude Skillz’s consumer and damages experts. The court’s rulings on Skillz’ motion for summary judgment as to Papaya’s counterclaims against Skillz, and Papaya’s experts are still pending (see Note 10, Commitments and Contingencies) .
Papaya Litigation On October 28, 2025, the Court denied Papaya’s motion for summary judgment as to Skillz’s claims against Papaya. The Court also denied Papaya’s motion to exclude Skillz’s consumer and damages experts. On November 21, 2025, the Court granted Skillz’s motion for summary judgment of all of Papaya’s remaining counterclaims and affirmative defenses.
General and Administrative General and administrative costs decreased by $17.8 million, or 18%, to $78.9 million in 2024 from $96.7 million in 2023. This was primarily driven by a $9.3 million decrease in employee related expenses due to a reduction in headcount in general and administrative departments.
General and administrative expenses decreased by $7.8 million, or 10%, to $71.1 million in 2025 from $78.9 million in 2024.
This was primarily driven by a $8.0 million decrease in research and development employee related costs. Sales and Marketing Sales and marketing costs decreased by $46.5 million, or 38%, to $76.4 million in 2024 from $122.9 million in 2023.
Sales and marketing expenses decreased by $5.2 million, or 7%, to $71.1 million in 2025 from $76.4 million in 2024. This was primarily due to lower employee related, player engagement incentives, user acquisition costs and professional fees from our Skillz segment.
Our platform enables fair, fun and competitive gaming experiences and the trust we foster with users is the foundation upon which our community is built.
We believe our platform democratizes the mobile gaming industry by “leveling the playing field” for developers worldwide, enabling us to deliver gaming experiences that our player community can trust. The trust and fairness we foster with our player community is part of the foundation upon which our business is built.

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