Q3 2025 Skillz Inc Earnings Call
Speaker #1: Hello everybody , and welcome to the Guild . Q3 2025 Earnings Conference Call . My name is Elliot , and I'll be coordinating your call today .
Speaker #1: If you'd like to register a question during today's event , please press Star One on your telephone keypad . And I'll hand over to Joseph Jaffoni .
Speaker #1: Please go ahead .
Speaker #2: This morning , skills issued its 2025 third quarter earnings release , which is available on the company's Investor Relations website . The company is in the process of completing its unaudited interim financial statements and other disclosures for the third quarter ended September 30th , 2025 .
Speaker #2: Accordingly , we are announcing preliminary results for the third quarter , which are based on currently available information and are subject to revision .
Speaker #2: Actual results may differ from these preliminary financial results and other financial information as final adjustments and developments may arise between now and the time .
Speaker #2: The results are finalized . In the event the company determines it will not file its quarterly report on Form 10-q by the prescribed deadline , it will file an extension on form 12 25 with the Securities and Exchange Commission , which may include further disclosure .
Speaker #2: The company is also completing the financial statements and other disclosures for the Annual Report on Form 10-K for the year ended December 31st , 2024 , and its quarterly Reports on Form 10-q for the three months ended March 31st , 2025 , and the three months ended June 30th , 2025 .
Speaker #2: We were unable to file annual report on Form 10-K for the year ended December 31st , 2024 , and we previously announced we received a notice from the NYSE that the company was not in compliance with its listing standards .
Speaker #2: The company is working diligently to complete the necessary work to file the form 10-K , as well as the quarterly Reports on Form 10-q for the three months ended March 31st , 2025 , and the three and six months ended June 30th , 2025 .
Speaker #2: As soon as practicable . The company expects to file the form 10-K and form 10-q by December 17th , 2025 , which is within the extension period provided to us by the New York Stock Exchange .
Speaker #2: Following our request for an additional extension period beyond the initial six month period granted by the notice . Additionally , the company intends to take the necessary steps to achieve compliance with the applicable New York Stock Exchange Listing standards as soon as possible .
Speaker #2: Before I turn the call over to founder and Chief Executive Officer of Skillz Inc. , Andrew Paradise , please note that management's comments today may include forward looking statements within the meaning of federal securities laws .
Speaker #2: Forward looking statements , which are usually identified by the use of words such as will , expect , should or other similar phrases are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect .
Speaker #2: Therefore , you should exercise caution in interpreting and relying on them . We refer you to the company's Securities and Exchange Commission filings for a more detailed discussion of the risks that could impact future operating results and financial condition .
Speaker #2: During the call , management will discuss non-GAAP financial measures , which it believes can be useful in evaluating the company's operating performance . These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with generally accepted accounting principles .
Speaker #2: The reconciliation of these measures to the most directly comparable GAAP measures is available in the company's third quarter 2020 earnings release . With that , I'll turn the call over to Andrew for some opening remarks , followed by a review of the financial performance from the Chief Financial Officer of Skillz Inc. Gaetano Franceschi .
Speaker #2: Before we open the call for questions . Andrew .
Speaker #3: Thank you , Joe , and good morning , everyone . I'll begin today's call with a review of the key Q3 quarterly results , which reflect the meaningful progress underway across skills and Aki .
Speaker #3: Q3 , GAAP revenue of 27 million grew 9% quarter over quarter . 11% year over year . Supported by continued momentum and stability of the competition platform .
Speaker #3: Adjusted EBITDA loss of 12 million decreased 3% quarter over quarter and grew 15% year over year , paying MWR of 155,000 , grew 6% quarter over quarter and 28% year over year , driven by higher player conversion rates and deeper monetization .
Speaker #3: We delivered quarterly sequential growth in what's typically a softer , seasonal period marked by higher digital traffic costs and competition for consumer attention .
Speaker #3: During the fall , sports season . Taking a look at our four business pillars , beginning with the first pillar , enhancing the platform for player and developer engagement in the quarter , we launched an owned and operated title , solitaire Skills , which is showing early promise .
Speaker #3: The game serves as a testing ground for new features that will be rolled out platform wide . Importantly , Solitaire Skills was developed in conjunction with third party developers and represents the first title to come to our $75 million Developer Accelerator program .
Speaker #3: This program continues to attract strong developer interest , with additional titles and development that are expected to be showcased at the game Developer Conference in March 2026 .
Speaker #3: Some of these upcoming games will incorporate new technology that we believe market through will further energize our developer community . Switching to Archy , the momentum from our adtech business continued this quarter with accelerating revenue growth , supported by new AI driven product launches across the iOS and Android .
Speaker #3: Operating systems . Building on its data , models introduced last quarter , Archy launched on iOS , enabling privacy forward performance marketing . These new offerings are already driving measurable scale and efficiency , and we will continue to invest in Akis Machine and Deep learning capabilities to expand its addressable market and improve returns on spend for advertisers .
Speaker #3: Regarding our second pillar , Upleveling , our organization , our gains in operational efficiency across both the competition platform and our key businesses continue to improve , allowing us to more effectively leverage our people and resources .
Speaker #3: We continue to strengthen our global team , particularly with the expansion of our new India office where we're hosting today's call as it relates to our third pillar , go to market strategy and monetization .
Speaker #3: Our focus remains on acquiring and retaining quality , paying players while driving efficient monetization . Paying Mao improved again this quarter , reflecting stronger conversion amongst our existing player base .
Speaker #3: While total MoU declined modestly . This reflects our emphasis on engagement , quality over volume . We continue to optimize customer acquisition costs and improve marketing efficiency .
Speaker #3: Supported by product level enhancements that strengthen monetization and retention . Together , these initiatives reinforce our go to market discipline , positioning the business for profitable scaling .
Speaker #3: Once we expand traffic more broadly . For our fourth pillar path to profitability , our keys business continues to expand its advertiser base and improve yield with net revenue up more than 100% year over year in improving margins with improvements in the competition platform , together with adtech business momentum , we continue to make progress on our path to profitability .
Speaker #3: Turning to an update on our Fair Play initiative . As discussed in previous calls , protecting players and preserving fair competition is core to our values .
Speaker #3: We continue to pursue litigation against Papaya and Voodoo games for their alleged use of bots . A practice we believe undermines consumer trust and harms the entire industry .
Speaker #3: Remain firm in our position as both the papaya and voodoo matters move through the litigation process . On October 28th , 2025 , Judge Court in the Southern District of New York denied Papaya's motion for summary judgment as to skillz claims against papaya .
Speaker #3: The court also denied Papaya's motion to exclude skill survey and damages . Experts . I encourage you to read Judge Cote's now public decision in detail .
Speaker #3: While other motions are still pending before the court . The court's confirmation that skills claims against papaya will proceed to a trial is a major step forward in our fair play initiative .
Speaker #3: Separately , I'd also like to address our dispute with tether . As we disclosed in a filing , two of tethers games , Solitaire Cube and 21 Blitz , will remain on our platform for a period of up to 18 months following termination .
Speaker #3: During the Post-termination period , skillz has the option , but not the obligation , to host paid competitions for these games on the company's platform .
Speaker #3: In our view , the alleged fraud from our competitors not only affects our players , but also how our developer partners are able to monetize and generate revenue in our ecosystem .
Speaker #3: We appreciate the developers have stood by us and weathered the issues caused by companies . In our view , engage in bot fraud .
Speaker #3: With that being said , we remain committed to protecting the industry that we pioneered and we anticipate our efforts to clean up the industry to be ultimately reflected in our financial performance .
Speaker #3: In closing , a key takeaway from today is that we're encouraged by the progress across both of our businesses , by combining our strengths in gaming and AI driven adtech , we're building a powerful foundation that can extend beyond gaming into adjacent verticals such as e-commerce , interactive entertainment , and retail media .
Speaker #3: Where performance , marketing , and content converge . The combination of a scaled competitive gaming platform and an AI powered advertising technology solution uniquely positions skills in Aki to capture long term growth opportunities .
Speaker #3: And in doing so , enhance value for our shareholders . With that , I'll hand it over to our Chief Financial Officer , Gaetano Franceschi , for the Financial Review .
Speaker #4: Thank you Andrew . Our third quarter results demonstrate the benefits of disciplined execution and structural improvements across both skillz and Aki , producing stronger fundamentals and a clear trajectory toward profitability .
Speaker #4: Q3 GAAP revenue was 27 million , up from 25 million in Q2 2025 and 24 million in Q3 2024 , representing 9% growth quarter over quarter and 11% year over year .
Speaker #4: Q3 paying Mao was 155,000 , up from 146,000 in Q2 2025 and 120,000 in Q3 2024 , representing 6% growth quarter over quarter and 28% year over year on costs , R&D expenses of 5 million increased 15% year over year , reflecting ongoing investment in our competition platform and Aki sales and marketing expenses of 17 million decreased 10% year over year , reflecting ongoing optimization of our user acquisition and engagement spend .
Speaker #4: G&A expenses of 17 million decreased 4% year over year , reflecting continued focus on expenses . Q3 net loss of 17 million , improved 17% year over year .
Speaker #4: Q3 adjusted EBITDA loss was 12 million , down from a loss of 11 million in Q2 2025 and up from a loss of 14 million in Q3 2024 , representing a 3% decrease quarter over quarter and 15% increase year over year .
Speaker #4: Our balance sheet remains healthy and we continue to manage capital prudently as we progress toward sustained profitability . We ended Q3 with 213 million in cash , including 1 million of restricted cash and 129.7 million of total debt .
Speaker #4: Principal outstanding , with continued execution and operational focus . We expect skills to deliver meaningful long term value for our shareholders as we execute with focus and discipline .
Speaker #4: Operator we're now ready to open the line for questions .
Speaker #1: Thank you . If you would like to ask a question , please press star followed by one on your telephone keypad . If you would like to withdraw your question , please press star followed by two .
Speaker #1: When preparing to ask your question , please ensure your device is unmuted locally . As a reminder that Star One to ask a question .
Speaker #1: Ladies and gentlemen , this concludes our Q&A and today's conference call . We'd like to thank you for your participation . You may now disconnect your lines .
