Q1 2026 Skillz Inc Earnings Call

May 19, 2026

Operator 2: Good afternoon, everyone. I'd like to welcome you to the Skillz Inc. Q1 2026 Results Call. At this time, I would like to turn the conference over to your host, Joseph Jaffoni from JCIR, to begin.

Operator: Good afternoon, everyone. I'd like to welcome you to the Skillz Inc. Q1 2026 Results Call. At this time, I would like to turn the conference over to your host, Joseph Jaffoni from JCIR, to begin.

Speaker #2: Good afternoon, everyone. Skillz issued its 2026 first quarter earnings release on May 15th, which is available on the company's investor relations website. Let me read the safe harbor language, and then we'll get right into the call.

Joseph Jaffoni: Good afternoon, everyone. Skillz issued its 2026 Q1 earnings release on 15 May, which is available on the company's investor relations website. Let me read the safe harbor language, then we'll get right into the call. All statements and comments made by management during this conference call, other than statements of historical fact, may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Skillz cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during the call. For additional details on these risks and uncertainties, please see Skillz annual report on Form 10-K for the year ended 31 December 2025, as filed with the Securities and Exchange Commission, and Skillz subsequent public filings with the SEC.

Joe Jaffoni: Good afternoon, everyone. Skillz issued its 2026 Q1 earnings release on 15 May, which is available on the company's investor relations website. Let me read the safe harbor language, then we'll get right into the call. All statements and comments made by management during this conference call, other than statements of historical fact, may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Skillz cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during the call. For additional details on these risks and uncertainties, please see Skillz annual report on Form 10-K for the year ended 31 December 2025, as filed with the Securities and Exchange Commission, and Skillz subsequent public filings with the SEC.

Speaker #2: All statements and comments made by management during this conference call, other than statements of historical fact, may be deemed forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995.

Speaker #2: Skillz cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward-looking statements made during the call.

Speaker #2: For additional details on these risks and uncertainties, please see Skillz annual report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission, and Skillz' subsequent public filings with the SEC.

Speaker #2: Skillz undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Additionally, we will reference various non-GAAP financial measures and KPIs during this call.

Joseph Jaffoni: Skillz undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Additionally, we will reference various non-GAAP financial measures and KPIs during this call. Please refer to our earnings release for an explanation of these measures and how we use them, and in the case of the non-GAAP financial measures, reconciliations to their nearest GAAP equivalents. It's now my pleasure to turn the call over to Skillz CEO, Andrew Paradise. Andrew, please go ahead.

Joe Jaffoni: Skillz undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Additionally, we will reference various non-GAAP financial measures and KPIs during this call. Please refer to our earnings release for an explanation of these measures and how we use them, and in the case of the non-GAAP financial measures, reconciliations to their nearest GAAP equivalents. It's now my pleasure to turn the call over to Skillz CEO, Andrew Paradise. Andrew, please go ahead.

Speaker #2: Please refer to our earnings release for an explanation of these measures and how we use them and, in the case of the non-GAAP financial measures, reconciliations to their nearest GAAP equivalents.

Speaker #2: It's now my pleasure to turn the call over to Skillz CEO, Andrew Paradise. Andrew, please go ahead.

Speaker #3: Thank you, Joe, and good afternoon, everyone. I'll begin today's call with a review of our first quarter results. For the first quarter, GAAP revenue was $29 million, down 3% quarter over quarter, and up 33% year over year.

Andrew Paradise: Thank you, Joe, good afternoon, everyone. I will begin today's call with a review of our first quarter results. For Q1, GAAP revenue was $29 million, down 3% quarter-over-quarter and up 33% year-over-year. Adjusted EBITDA loss was $13 million, compared to a loss of $10 million in Q4. The increase in Adjusted EBITDA loss was driven by higher litigation-related expenses during the quarter. Importantly, excluding litigation-related expenses, Adjusted EBITDA in Q1 2026 improved to a loss of $7 million, representing a 15% improvement quarter-over-quarter on a normalized basis. At Razer, Adjusted EBITDA was $2 million, marking a third consecutive quarter of profitability. We expect this improvement in underlying profitability across our portfolio as we continue to move into Q2.

Speaker #3: Adjusted EBITDA loss was $13 million, compared to a loss of $10 million in the fourth quarter, the increase in adjusted EBITDA loss was driven by higher litigation-related expenses during the quarter.

Speaker #3: Importantly, excluding litigation-related expenses, adjusted EBITDA in Q1 2026 improved to a loss of $7 million. Representing a 15% improvement quarter over quarter on a normalized basis.

Speaker #3: At Razor, adjusted EBITDA was $2 million, marking its third consecutive quarter of profitability. We expect this improvement in underlying profitability across our portfolio as we continue to move into the second quarter.

Speaker #3: Paying MAU for the skills platform was $128,000, down 9% quarter over quarter, and up 3% year over year. This quarterly sequential decline in PMAU was partly driven by our decrease in UA spend, resulting in fewer new user cohort additions.

Andrew Paradise: Paying MAU for the Skillz platform was 128,000, down 9% quarter-over-quarter and up 3% year-over-year. This quarterly sequential decline in PMAU was partly driven by our decrease in UA spend, resulting in fewer new user cohort additions. While top-line PMAU has decreased, we're encouraged that retention across our more mature cohorts improved from the previous quarter. This reflects a healthier platform demonstrated by our 7% quarter-over-quarter increase in average revenue per paying user. Moving to our Fair Play initiative and an update on our litigation against Papaya Gaming.

Speaker #3: While top-line PMAU has decreased, we're encouraged that retention across our more mature cohorts improved from the previous quarter. This reflects a healthier platform demonstrated by our 7% quarter over quarter increase in average revenue per paying user.

Speaker #2: Moving to our Fair Play initiative, and an update on our litigation against Papaya Gaming. In April, a unanimous jury in the U.S. District Court for the Southern District of New York found Papaya liable for false advertising under the Lanham Act and deceptive practices under New York law.

Andrew Paradise: In April, a unanimous jury in the U.S. District Court for the Southern District of New York found Papaya liable for false advertising under the Lanham Act and deceptive practices under New York law, awarding Skillz $420 million in actual damages, the largest false advertising award in US history under the Lanham Act. The jury also made advisory findings supporting disgorgement of either $719 million based on Papaya's profits or $652 million based on Papaya's cost savings. These are alternative theories and will not be added together. The court will determine whether to award disgorgement, and if so, the final amount. It may accept, modify, or decline the advisory findings entirely, ensuring there is no duplicative recovery where actual damages and disgorgement overlap.

Speaker #2: Awarding Skillz $420 million in actual damages, the largest false advertising award in U.S. history under the Laneham Act. The jury also made advisory findings supporting disgorgement of either $719 million based on Papaya's profits or $652 million based on Papaya's cost savings.

Speaker #2: These are alternative theories and will not be added together. The court will determine whether to award disgorgement, and if so, the final amount. It may accept, modify, or decline the advisory findings entirely, ensuring there is no duplicative recovery where actual damages and disgorgement overlap.

Speaker #2: Under the Lanham Act, the court has the ability to enhance the actual damages awarded by up to three times the $420 million for any disgorgement the court chooses to award.

Andrew Paradise: Under the Lanham Act, the court has the ability to enhance the actual damages award by up to three times the $420 million. For any disgorgement the court chooses to award, there is no cap on enhancement. In simple terms, the total potential award ranges from $420 million to over $1.2 billion, depending on the court's determination on disgorgement enhancement. To understand what this verdict means for the category we pioneered, it helps to understand some of the why. Skillz founded the skill-based competitive gaming category on a single premise. The players compete fairly against real human opponents for real prizes. As the category grew, we saw competitors gaining market share in ways that defied explanation. This turned out to be what we believe to be fraud.

Speaker #2: There is no cap on enhancement. In simple terms, the total potential award ranges from $420 million to over $1.2 billion, depending on the court's determination on disgorgement and enhancement.

Speaker #2: To understand what this verdict means for the category we pioneered, it helps to understand some of the why. Skillz founded the skill-based competitive gaming category on a single premise.

Speaker #2: The players compete fairly against real human opponents for real prizes. As the category grew, we saw competitors gaining market share in ways that defied explanation.

Speaker #2: This turned out to be what we believe to be fraud. We had to use the legal system to fight back on behalf of our players and our shareholders.

Andrew Paradise: We had to use the legal system to fight back on behalf of our players and our shareholders. What we alleged against one of these competitors was confirmed by Papaya's own internal documents. Bots were being deployed at scale. Bot scores selected by Papaya determined the outcomes. None of it was disclosed to the players. I remind you, we've taken this path before. In 2024, a federal jury found AviaGames liable for patent infringement and awarded $42.9 million in damages. We subsequently pursued a separate false advertising case against Avia. The two cases ultimately settled together for $80 million. We applied those learnings and brought Papaya to trial on false advertising grounds directly. The evidence at trial was clear. Papaya's bots outnumbered human players.

Speaker #2: What we alleged against one of these competitors was confirmed by Papaya's own internal documents. Bots were being deployed at scale. Bot scores selected by Papaya determined the outcomes, and none of it was disclosed to the players.

Speaker #2: I remind you, we've taken this path before. In 2024, a federal jury found ABA Games liable for patent infringement and awarded $42.9 million in damages.

Speaker #2: We subsequently pursued a separate false advertising case against ABA. And the two cases ultimately settled together for $80 million. We applied those learnings and brought Papaya to trial on false advertising grounds directly.

Speaker #2: The evidence at trial was clear. Papaya's bots outnumbered human players. Across tournaments advertising approximately $6.7 billion in prize pools, only about $2 billion was actually paid to real users.

Andrew Paradise: Across tournaments advertising approximately $6.7 billion in prize pools, only about $2 billion was actually paid to real users, leaving roughly $4.7 billion in imaginary money, a term used by Papaya's own defense counsel that was never paid to human players. The jury's verdict confirms that these practices violate the Lanham Act's false advertising standards. We founded this industry, and we remain committed to ensuring that fair competition is the standard every participant is held to. On collectability, based on publicly available data, Papaya operates at substantial scale, with leading titles ranking among the most downloaded in the US, generating significant revenue. Based on independent analyst coverage notes, Papaya's annual net revenue is approximately $950 million to 1.1 billion. We believe this scale supports Papaya's capacity to satisfy a judgment of this size.

Speaker #2: Leaving roughly $4.7 billion in, quote, 'imaginary money,' end quote, a term used by Papaya's own defense counsel that was never paid to human players. The jury's verdict confirmed that these practices violated the Lanham Act's false advertising standards.

Speaker #2: We founded this industry, and we remain committed to ensuring that fair competition is the standard every participant is held to. On collectibility, based on publicly available data, Papaya operates a substantial scale with leading titles ranking among the most downloaded in the U.S., generating significant revenue.

Speaker #2: Based on independent analyst coverage notes, Papaya's annual net revenue is approximately $950 million to $1.1 billion. We believe this scale supports Papaya's capacity to satisfy a judgment of its size.

Speaker #2: Looking ahead, we expect that the court will determine the final disgorgement award in June. The parties have been ordered to engage in settlement discussions, which we're actively pursuing.

Andrew Paradise: Looking ahead, we expect that the court will determine the final disgorgement award in June. The parties have been ordered to engage in settlement discussions, which we're actively pursuing. We're also evaluating alternatives to secure capital against the judgment and are monitoring closely whether an appeal bond or other secured capital will be required. This verdict confirms that false advertising in a skill-based gaming category violates federal law. We believe the Papaya verdict supports the integrity of the category and may improve competitive dynamics over time. Our litigation against Voodoo Games continues to proceed on the same principles of Fair Play. The Papaya verdict is a significant milestone, and our focus remains on operating and growing our business. As we move through 2026, we're organizing our execution around three core initiatives that build on the foundation established during our turnaround. First, strengthen demand and engagement.

Speaker #2: We're also evaluating alternatives to secure capital against the judgment. And our monitoring closely whether an appeal bond or other secured capital will be required.

Speaker #2: This verdict confirms that false advertising is skill-based gaming category violates federal law. We believe the Papaya verdict supports the integrity of the category and may improve competitive dynamics over time.

Speaker #2: Our litigation against Voodoo Games continues to proceed on the same principles of fair play. The Papaya verdict is a significant milestone, and our focus remains on operating and growing our business.

Speaker #2: As we move through 2026, we're organizing our execution around three core initiatives that build on the foundation established during our turnaround. First, strengthen demand and engagement.

Speaker #2: Second, execute a more efficient and disciplined go-to-market. And third, improve our platform performance and infrastructure. Across each of these initiatives, we're leveraging the skills competition platform, Razor's performance marketing engine, and Beamable, our newly acquired developer platform.

Andrew Paradise: Second, execute a more efficient and disciplined go-to-market. Third, improve our platform performance and infrastructure. Across each of these initiatives, we're leveraging the Skillz competition platform, Razer's performance marketing engine, and Beamable, our newly acquired developer platform. Together, our businesses are building a connected ecosystem designed to improve performance and drive efficiency. Turning to our first initiative, strengthening demand and engagement. On the Skillz platform, we remain focused on quality and long-term value. We saw continued strength in our core player base, particularly among longer-tenured cohorts. Retention across our 3-plus month cohorts improved quarter-over-quarter, driving higher engagement and monetization on a per-user basis. This reflects the underlying health of the platform. Solitaire Skills continues to scale as a top title on the platform.

Speaker #2: Together, our businesses are building a connected ecosystem designed to improve performance and drive efficiency. Turning to our first initiative, strengthening demand and engagement. On the skills platform, we remain focused on quality and long-term value.

Speaker #2: We saw continued strength in our core player base, particularly among longer-tenured cohorts, retention across our three-plus-month cohorts improved quarter over quarter, driving higher engagement and monetization on a per-user basis.

Speaker #2: This reflects the underlying health of the platform. Solitaire's skills continues to scale as a top title on the platform. We also strengthened our own content portfolio through the acquisitions of Blackout, Bingo, and Domino's Gold, and are expanding the pipeline with new titles launching later this year.

Andrew Paradise: We also strengthened our own content portfolio through the acquisitions of Blackout Bingo and Dominoes Gold, and are expanding the pipeline with new titles launching later this year. At Razer, engagement is driven by precision targeting and performance marketing at scale. We added several new advertisers across gaming, consumer applications, retail, and entertainment. We grew revenue across both new and existing customers and launched our Connected TV business, opening a new channel for advertiser spend. Turning to our second initiative, efficient and disciplined go-to-market. On the Skillz platform, we remain focused on executing an efficient and disciplined go-to-market strategy. In Q1, user acquisition spend continued to focus on attracting profitable long-term players. Our approach reflects concentrating investment in channels with attractive returns. At Razer, we continue to scale our performance, expanding our advertiser base and deepening relationships with existing clients.

Speaker #2: At Razor, engagements driven by precision targeting and performance marketing at scale. We added several new advertisers across gaming, consumer applications, retail, and entertainment. We grew revenue across both new and existing customers and launched our connected TV business, opening a new channel for advertiser spend.

Speaker #2: Turning to our second initiative, efficient and disciplined go-to-market. On the skills platform, we remain focused on executing an efficient and disciplined go-to-market strategy. In Q1, user acquisition spend continued to focus on attracting profitable long-term players.

Speaker #2: Our approach reflects concentrating investment in channels with attractive returns. At Razor, we continue to scale our performance, expanding our advertiser base and deepening our relationships with existing clients.

Speaker #2: During the quarter, we continued to optimize median margins through improved product mix. Our machine learning platform continues to drive stronger targeting efficiency and return on ad spend for advertisers.

Andrew Paradise: During the quarter, we continued to optimize media margins through improved product mix. Our machine learning platform continues to drive stronger targeting efficiency and return on ad spend for advertisers. The launch of Connected TV has attracted initial advertiser commitments, broadening Razer's addressable market and opening a new channel for advertising spend. Turning to our third initiative, improving platform performance and infrastructure. On the Skillz platform, we continue to invest in systems supporting player engagement. We're also advancing our pro SDK development with several developers building new games or converting existing games using this technology. During the quarter, Razer continued migration to more advanced neural network models, improved training efficiency and prediction accuracy, expanded integrations with measurement partners, and advanced next-generation machine learning infrastructure.

Speaker #2: Additionally, the launch of connected TV has attracted initial advertiser commitments broadening Razor's addressable market and opening a new channel for advertising spend. Turning to our third initiative, improving platform performance and infrastructure.

Speaker #2: On the Skills platform, we continue to invest in systems supporting player engagement. We're also advancing our Pro SDK development, with several developers building new games or converting existing games using this technology.

Speaker #2: During the quarter, Razor continued migration to more advanced neural network models. Improved training efficiency and prediction accuracy. Expanded integrations with measurement partners. And advanced next-generation machine learning infrastructure.

Speaker #2: In Q1, we completed the acquisition of Beamable, a developer platform providing the game services and backend infrastructure that we believe will power skills over time.

Andrew Paradise: In Q1, we completed the acquisition of Beamable, a developer platform providing the game services and back-end infrastructure that we believe will power Skillz over time. Beamable joins Razer. The Skillz competition platform is the third component of our connected ecosystem, bringing developer tooling to our own products and to the customers Razer brings into the network. Beamable also continues to serve the developers and studios that relied on the platform prior to the acquisition. Taken together, our businesses form a compounding flywheel. We believe the campaigns improve the model. Every impression strengthens targeting. Every outcome improves future performance. In closing, the first quarter reflected disciplined execution across the organization. We strengthened the Skillz platform, improved unit economics, continued to scale Razer as a profitable growth engine, and began integrating Beamable as the developer platform powering our products and ecosystem over time.

Speaker #2: Beamable joins Razor and the skills competition platform as the third component of our connected ecosystem, bringing developer tooling to our own products and to the customers Razor brings into the network.

Speaker #2: Beamable also continues to serve the developers and studios that relied on the platform prior to the acquisition. Taken together, our businesses form a compounding flywheel.

Speaker #2: We believe the campaigns improve the model. Every impression strengthens targeting, and every outcome improves future performance. In closing, the first quarter reflected disciplined execution across the organization.

Speaker #2: We strengthened the skills platform, improved unit economics, continued to scale Razor as a profitable growth engine, and began integrating Beamable as the developer platform powering our products and ecosystem over time.

Speaker #2: By combining competitive skill-based gaming with AI-driven performance marketing, we're building an ecosystem designed to scale engagement, data, and monetization with discipline. We believe this integrated approach creates long-term optionality in gaming as well as in adjacent areas where content, identity, commerce, and performance marketing converge.

Andrew Paradise: By combining competitive skill-based gaming with AI-driven performance marketing, we're building an ecosystem designed to scale engagement, data, and monetization with discipline. We believe this integrated approach creates long-term optionality in gaming as well as in adjacent areas where content, identity, commerce, and performance marketing converge. Our focus remains on executing against that opportunity while maintaining financial discipline and driving long-term shareholder value. With that, I'll turn it over to Gaetano for the financial review.

Speaker #2: Our focus remains on executing against that opportunity, while maintaining financial discipline and driving long-term shareholder value. And with that, I'll turn it over to Gaetano for the financial review.

Speaker #1: Thank you, Andrew. Our first quarter results highlight the benefits of disciplined execution and structural improvements across both the skills and Razor businesses. Producing stronger fundamentals in a trajectory toward profitability.

Gaetano Franceschi: Thank you, Andrew. Our Q1 results highlight the benefits of disciplined execution and structural improvements across both the Skillz and Razer businesses, producing stronger fundamentals and a trajectory toward profitability. Q1 2026 GAAP revenue was $29 million, down from $30 million in Q4 2025 and up from $22 million in Q1 2025, representing a 3% decline quarter over quarter and 33% growth year over year. Of note, Q4 2025 revenue included an indirect tax accrual release. Normalizing for the indirect tax accrual release, Q1 2026 revenue would be up 2% quarter over quarter. Q1 2026 research and development expenses of $5 million increased 5% year over year, reflecting ongoing investment in our Skillz and Razer businesses. Q1 2026 sales and marketing expenses of $17 million decreased 4% year over year.

Speaker #1: Q1 2026 GAAP revenue was $29 million, down from $30 million in Q4 2025 and up from $22 million in Q1 2025, representing a 3% decline quarter over quarter and 33% growth year over year.

Speaker #1: Of note, Q4 2025 revenue included an indirect tax accrual release. Normalizing for the indirect tax accrual release, Q1 2026 revenue would be up 2% quarter over quarter.

Speaker #1: Q1 2026 research and development expenses of $5 million increased 5% year over year, reflecting ongoing investment in our skills and Razor businesses. Q1 2026 sales and marketing expenses of $17 million decreased 4% year over year.

Speaker #1: In the quarter, end-user marketing was $8 million and user acquisition was $3 million. Q1 2026 general and administrative expenses of $19 million increased 2% year over year.

Gaetano Franceschi: In the quarter, end user marketing was $8 million and user acquisition was $3 million. Q1 2026 general and administrative expenses of $19 million increased 2% year-over-year. Q1 2026 net loss of $11 million improved 36% year-over-year. Q1 Adjusted EBITDA loss was $13 million compared to a loss of $10 million in Q4 2025, and improved from a loss of $17 million in Q1 2025. Excluding litigation-related expenses, Adjusted EBITDA in Q1 2026 improved to a loss of $7 million, representing a 15% improvement quarter-over-quarter on a normalized basis. We believe our balance sheet remains healthy, and we continue to manage capital prudently as we progress towards sustained profitability.

Speaker #1: Q1 2026 net loss of $11 million improved 36% year over year. Q1 adjusted EBITDA loss was $13 million, compared to a loss of $10 million in Q4 2025, and improved from a loss of $17 million in Q1 2025.

Speaker #1: Excluding litigation-related expenses, adjusted EBITDA in Q1 2026 improved to a loss of $7 million, representing a 15% improvement quarter-over-quarter on a normalized basis.

Speaker #1: We believe our balance sheet remains healthy, and we continue to manage capital prudently as we progress toward sustained profitability. We ended Q1 2026 with $185 million in cash and cash equivalents, and $130 million of debt outstanding due by the end of this year.

Gaetano Franceschi: We ended Q1 2026 with $185 million in cash and cash equivalents and $130 million of debt outstanding due by the end of this year. As the debt approaches maturity later this year, we continue to evaluate a range of strategic alternatives to optimize our capital structure. We are driving the business forward with focus and discipline to deliver meaningful long-term value for our shareholders and look forward to updating you further on our progress in 2026. Operator, we are now ready to open the line for questions.

Speaker #1: As the debt approaches maturity later this year, we continue to evaluate a range of strategic alternatives to optimize our capital structure. We are driving the business forward with focus and discipline to deliver meaningful long-term value for our shareholders.

Speaker #1: And look forward to updating you further on our progress in 2026. Operator, we're now ready to open the line for questions.

Speaker #2: Thank you, everyone. If you would like to ask a question, please press star one on your telephone keypad. We'll take the first question today from Ed Alter from Jefferies.

Operator 2: Thank you. Everyone, if you would like to ask a question, please press star one on your telephone keypad. We'll take the first question today from Ed Alter from Jefferies.

Operator: Thank you. Everyone, if you would like to ask a question, please press star one on your telephone keypad. We'll take the first question today from Ed Alter from Jefferies.

Ed Alter: Hi. Good afternoon. I want to ask a question on paying MAU and GMV. I saw that actually GMV was actually up quarter on quarter despite kind of paying users down. Can you just talk about kind of the two drivers of that and, you know, why the spend per player is actually increasing and kind of some of the drivers there?

Speaker #3: Hi, good afternoon. I want to ask a question on paying MAU and GMV. I saw that actually GMV was up quarter on quarter, despite paying users being down.

Speaker #3: So can you just talk about kind of the two drivers of that and why the spend per player is actually increasing and kind of some of the drivers there?

Speaker #1: Thanks, Ed. Thanks for the question. Yeah, I think as you know, what we focus on is really hyping users—long-term users. And so this is sort of a view of an outcome that we've been driving towards.

Gaetano Franceschi: Thanks, thanks, Ed. Thanks for the question. Yeah. I think as you know, what we focus on is really high-paying users, long-term users. This is sort of a view of an outcome that we've been driving towards and trying to continue to retain and attract high-paying users. You see, even though our PMAU is slightly down, you can see our GMV continues to grow and our PPU continues to grow.

Speaker #1: And trying to continue to retain and attract high-paying users. So you see even though our PMAU is slightly continues to grow and our PUPU continues to grow.

Speaker #3: And if I could also jump in.

Andrew Paradise: If I could also jump in.

Speaker #4: Please do.

Ed Alter: Please do.

Speaker #3: Oh, sorry. I was going to add that one of the reasons PMAU is slightly down is we actually dialed back user acquisition in Q1.

Andrew Paradise: Sorry. I was gonna add that one of the reasons PMAU is slightly down is we actually dialed back user acquisition in Q1, really, you know, continuing to raise our focus on profitable acquisition. Continuing to bring in tighter and tighter break-even periods and better one-year paybacks. We're, you know, I think we're kind of at maximum tight now as we ended the quarter and, you know, we're thinking about how to thoughtfully expand on marketing.

Speaker #3: Really continuing to raise our focus on profitable acquisition, so continuing to bring in tighter and tighter break-even periods and better one-year paybacks, where I think we're kind of at maximum tight now as we ended the quarter.

Speaker #3: And we're thinking about how to thoughtfully expand on marketing.

Speaker #4: Yeah, great, great. And just to follow up on that, because I noticed that the MAUs was also down a decent amount, but a lot of the non-paying MAUs were down.

Ed Alter: Yeah. Great. Great. Just to follow up on that because I, you know, noticed that the, you know, the MAUs was also down a decent amount, but a lot of the, you know, non-paying MAUs were down. Is this kind of like a new normal for kind of your marketing strategy? Just how do we go from here is, I guess, kind of the main question.

Speaker #4: Is this kind of like a new normal, or for kind of your marketing strategy, or just how do we go from here is, I guess, kind of the main question?

Speaker #3: Yeah, I think it's with where we are on user acquisition and kind of cutting spend and optimizing, you can expect us that we're stabilized and going to build forward.

Andrew Paradise: Yeah. I think it's with where we are on user acquisition and kind of cutting spend and optimizing, you can expect us that we're stabilized and going to build forward. You'll I would expect PMAU and traffic overall flat to up with improving unit economics. That's the way I think about the business. It's, you know, at the end of the day, if we can service a higher value customer, it's a better business.

Speaker #3: So you would I would expect PMAU and traffic overall flat up with improving economics that's the way I think about the business. It's at the end of the day, if we can service a higher-value customer, it's a better business.

Speaker #4: Great. Thanks. I can circle back in the queue.

Ed Alter: Great. Think I can circle back in the queue.

Speaker #3: Yep.

Andrew Paradise: Yep.

Speaker #2: The next question is from the next question comes from Barath Nagaraj from Canter Fitzgerald.

Operator 2: The next question is.

Operator: The next question is.

Andrew Paradise: Thank you for your question.

Operator 2: The next question comes from Bharath Nagaraj from Cantor Fitzgerald.

Operator: The next question comes from Bharath Nagaraj from Cantor Fitzgerald.

Speaker #5: Hi. Thank you for taking my questions. Just the first one is around, are you seeing any reduction in user acquisition costs at all since the lawsuit went in your favor?

Bharath Nagaraj: Hi. Thank you for taking my questions. Just the first one is around, are you seeing any reduction in user acquisition costs at all since the lawsuit went in your favor? The second one, just to follow up on the previous answer that you provided to the previous question. What would you actually attribute the growth in paying MAUs since Q1 2025, right? Like, it's kind of been pretty good since then and up until Q1 2026. Is it because the mobile gaming environment is a lot better now, or is it some kind of a change in strategy? I note that the user acquisition costs have come down as well, as you mentioned, so hence wanting to understand that a bit better. Thank you.

Speaker #5: And then the second one, just a follow-up on the previous answer that you provided, to the previous question, what would you actually attribute the growth in paying MAUs since Q1 2025, right?

Speaker #5: It's kind of been pretty good since then. And up until Q1 2026, is it because better now, or is it some kind of a change in strategy?

Speaker #5: And I note that the user acquisition costs have come down as well, as you mentioned. So hence wanting to understand that a bit better.

Speaker #5: Thank you.

Speaker #3: Yeah, thank you for the question. Let me hit the first part on user acquisition costs since the lawsuit. I think we really difficult for us to directly link the two and create attribution there.

Andrew Paradise: Yeah. Thank you for the question. Let me hit the first part on user acquisition costs and some lawsuit. You know, I think it'd be really difficult for us to directly link the two and create attribution there. In terms of user acquisition costs, we are at, you know, as of the end of Q1, the best UA prices we've seen in I don't know how many years. Multiple years. We are, you know, we're seeing attractive customer acquisition costs and thinking about how we can thoughtfully scale up where we're seeing the, you know, these attractive prices. In terms of the second question, attributing growth to paying MAU and how, you know, how MAU has been growing from Q1 2025 through this past quarter.

Speaker #3: In terms of user acquisition costs, we are at as of the end of Q1, the best UA prices we've seen in I don't know how many years, multiple years.

Speaker #3: So we are we're seeing attractive customer acquisition costs. And thinking about how we can thoughtfully scale up where we're seeing these attractive prices. In terms of the second question, attributing growth to paying PMAU, and how PMAU has been growing from Q1 25 through this past quarter, perhaps Gaetano do you want to jump in on that, or?

Andrew Paradise: Perhaps, Gaetano, do you wanna jump in on that or?

Speaker #1: Yeah, thanks, Andrew. I think the way to think about it and what we've been describing for the past several quarters is really to focus around product-led growth.

Gaetano Franceschi: Yeah. Thanks, Andrew. I think the way to think about it and what we've been describing for the past several quarters is really the focus around, you know, product-led growth. There's been a significant number of investments in our platform around retention and engagement, and things that we've launched are really focused around attracting and retaining paying customers. I think you're seeing that as a result that, you know, our focus on paying MAU is paying off.

Speaker #1: And so, there’s been a significant number of investments in our platform around retention and engagement, and things that we’ve launched are really focused around attracting and retaining paying customers.

Speaker #1: And so I think you're seeing that, as a result, our focus on paying MAU is paying off.

Speaker #4: Okay. Okay. Thank you. Can I ask one more, if that's all right, or should I just jump back in the queue?

Bharath Nagaraj: Okay. Okay. Thank you. Can I ask one more, if that's all right, or should I just jump back in the queue?

Speaker #3: No, no, no. Go ahead.

Andrew Paradise: No, no. Go ahead.

Speaker #5: I note that I think a couple of your development partners, I think you've said, account for a significant portion of your revenue. And I think, if I'm not wrong—correct me there if I'm wrong—Solitaire Cube and 21 Blades will kind of drop off the platform in January 2027.

Bharath Nagaraj: I note that, I think a couple of your development partners, I think you've said, account for, like, a significant portion of your revenue. I think if I'm not wrong, correct me there if I'm wrong, Solitaire Cube and 21 Blitz will kind of drop off the platform in January 2027. I'm just wondering what the future strategy is there. I think you're trying to develop some of your own games, but how do we think about the trajectory of revenue post, I don't know, Q4 this year?

Speaker #5: So, I'm just wondering what the future strategy is there. I think you're trying to develop some of your own games, but how do we think about the trajectory of revenue post, I don't know, Q4 this year?

Speaker #3: Yeah, thank you for the question on that. So, to kind of parrot it back, how are we thinking about the migration of one of our developers off platform?

Andrew Paradise: Thank you for the question on that. To kind of pare it back, how are we thinking about the migration of one of our developers off platform. We now, as of the end of Q1, we acquired Blackout Bingo and Dominoes Gold. We own and operate now, three of the top five titles in the platform. This actually happened in Q3 of last year. When that particular developer left the platform, there were 34 titles, 2 of which we have contractual rights through March 2027. The other 32, which we had contractual exclusivity up through December. We migrated the first 32 titles in Q3 in quarter.

Speaker #3: We now, as of the end of Q1, have acquired Blackout Bingo and Domino’s Gold. So, we own and operate now three of the top five titles on the platform.

Speaker #3: And this actually happened in Q3 of last year, but when that particular developer left the platform, there were 34 titles, two of which we have contractual rights through March of 2027.

Speaker #3: And then the other 32, which we had contractually exclusivity up through December. We migrated the first 32 titles in Q3. So in quarter. And so you can see kind of the result of that in our numbers.

Andrew Paradise: You can see kind of the result of that in our numbers. We are now looking at, in particular, I think you mentioned Solitaire Cube, but looking at the migration to future state. We have quite a number of Solitaire titles on platform as well as the owned and operated title, Solitaire Skills.

Speaker #3: We are now looking at in particular, I think you mentioned Solitaire Cube, but looking at the migration to future state. And we have quite a number of Solitaire titles on platform as well as the owned and operated title Solitaire Skillz.

Speaker #5: Understood. Thank you very much.

Bharath Nagaraj: Understood. Thank you very much.

Speaker #2: And we'll take a follow-up from Ed Alter from Jefferies.

Operator 2: We'll take a follow-up from Ed Alter from Jefferies.

Operator: We'll take a follow-up from Ed Alter from Jefferies.

Speaker #4: Great. Thanks for letting me back in. I just wanted to, yeah, follow up on the last question. With you guys now making your own Solitaire game, buying Blackout, and Domino’s Gold, it seems like a decently large strategy shift to now you guys own most of the large games on the platform.

Ed Alter: Great. Thanks for letting me back in. I just wanted to, yeah, follow up on the last question. You know, with you guys now making your own Solitaire game, buying Blackout and Dominoes Gold, seems like a decently large strategy shift to now you guys own most of the large games on the platform. Is this how to think about the business going forward or just kinda some of the rationale for doing that, kinda that shift?

Speaker #4: Is this how to think about the business going forward, or just kind of some of the rationale for doing that kind of shift?

Speaker #3: Yeah, first of all, thank you for the question. But I would say, yes, owning and operating is a shift from the historic only third-party and second-party relationships with developers.

Andrew Paradise: Yeah. First of all, thank you for the question. You know, I would say yes, owning and operating is a shift from the historic, only third party and second party relationships with developers. You may be aware that we've been, you know, second party or investor in content for a number of years. I wanna say, you know, over 5 years pre-IPO, we've owned a stake in content on the platform. Now owning and operating, so if you think about first party, second party, third party, now we're entering into first party relationships with content, so owned and operated.

Speaker #3: You may be aware that we've been a second-party or investor in content. For a number of years—I want to say over five years pre-IPO—we've owned a stake in content on the platform.

Speaker #3: Now, owning and operating—so if you think about first-party, second-party, third-party—now we're entering into first-party relationships with content. So, owned and operated. And the way we think about this is, if there's a category on system and a piece of content like Solitaire, where there's relatively little development in the future, acquiring a developer or developer's game or building a game in that category creates a stability for the platform and a consistent offering that we can have for the platform, which actually is a benefit to every developer on the platform who's building new content and exploring new genres.

Andrew Paradise: The way we think about this is if there's a category on Skillz and a piece of content like Solitaire where there's relatively little development in the future, acquiring a developer or a developer's game or building a game in that category, you know, it creates a stability for the platform and a consistent offering that we can have for the platform, which actually is a benefit to every developer on the platform who's building new content and exploring new genres. It's very much a strategy that, you know, I think we've seen with whether it's, you know, Epic at a much larger scale running Fortnite or it's Valve with, you know, with Steam, their platform running Dota 2 and Counter-Strike.

Speaker #3: It's very much a strategy that I think we've seen with whether it's Epic at a much larger scale running Fortnite, or it's Valve with Steam, their platform, running Dota 2 and Counter-Strike.

Speaker #3: I think this is a common thing in the gaming industry, in terms of gaming platforms, and something that we think makes a lot of sense for the future of the business.

Andrew Paradise: I think this is a common thing in the gaming industry in terms of gaming platforms and something that, you know, we think makes a lot of sense for the future of the business.

Speaker #4: Great. Thanks.

Ed Alter: Great. Thanks.

Speaker #2: And everyone, at this time there are no further questions. This does conclude our conference for today. We would like to thank you all for your participation.

Operator 2: Everyone, at this time, there are no further questions. This does conclude our conference for today. We would like to thank you all for your participation. You may now disconnect.

Operator: Everyone, at this time, there are no further questions. This does conclude our conference for today. We would like to thank you all for your participation. You may now disconnect.