Skillz (NYSE:SKLZ) reported first-quarter financial results on Tuesday. The transcript from the company’s first-quarter earnings call has been provided below.
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Access the full call at https://events.q4inc.com/attendee/800226182
Summary
Skillz Inc reported Q1 2026 GAAP revenue of $29 million, a 3% decrease quarter-over-quarter but a 33% increase year-over-year.
The company experienced a $13 million adjusted EBITDA loss due to increased litigation expenses, but underlying profitability improved with a normalized EBITDA loss of $7 million.
Skillz Inc won a significant legal victory against Papaya Gaming, with a jury awarding $420 million in damages, potentially increasing to over $1.2 billion upon court determination.
The company is focusing on three strategic initiatives: strengthening demand and engagement, executing an efficient go-to-market strategy, and improving platform performance.
Skillz Inc has acquired Blackout Bingo and Domino’s Gold, enhancing its content portfolio and demonstrating a shift towards owning and operating more of its top titles.
Full Transcript
OPERATOR
Good afternoon everyone. I’d like to welcome you to the Skillz Inc. first quarter 2026 results call. this time I would like to turn the conference over to your host Joe Giffone from JCIR to begin.
Joe Giffone
Good afternoon everyone. Skillz issued its 2026 first quarter earnings release on May 15, which is available on the Company’s investor relations website. Let me read the safe harbor language and then we’ll get right into the call. All statements and comments made by management during this conference call other than statements of historical fact may be deemed forward looking statements for purposes of the Private Securities Litigation Reform act of 1995. Skillz cautions that these forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those reflected by the forward looking statements made during the call. For additional details on these risks and uncertainties, please see Skillz Annual report on Form 10K for the year ended December 31, 2025 as filed with the SECurities and Exchange Commission and Skillz subsequent public filings with the SEC. Skillz undertakes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Additionally, we will reference various non Generally Accepted Accounting Principles (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 Generally Accepted Accounting Principles (GAAP) financial measures, reconciliations to the nearest Generally Accepted Accounting Principles (GAAP) equivalents. It’s now my pleasure to turn the call over to Skillz CEO Andrew Paradise. Andrew, please go ahead.
Andrew Paradise (Chief Executive Officer)
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. Adjusted EBITDA loss was 13 million compared to a loss of 10 million in the fourth quarter. The increase in adjusted EBITDA loss is 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 Razor adjusted EBITDA as 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 the second quarter. Paying Monthly Active Users (PMAU) for the skills platform was 128,000, down 9% quarter and up 3% year over year. This quarterly sequential decline in PMAU was partly driven by our decrease in User Acquisition (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 In April, 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 skills 420 million in actual damages, the largest false advertising award in U.S. 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 finance entirely, ensuring there is no duplicative recovery where actual damages and discouragement overlap. 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. 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 Gaming’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. 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. We subsequently pursued a separate false advertising case against ABA Games, and the two cases ultimately sold together for 80 million. We applied those learnings and brought Papaya to trial on false advertising grounds directly. The evidence to trial is clear. Papaya Gaming’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, leaving roughly 4.7 billion in quote imaginary money, a term used by Papaya Gaming’s own defense counsel that was never paid to human players. The jury’s verdict confirms that these practices violated the LAND and MAX 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 collectibility based on publicly available data. APAI operates at substantial scale with leading titles ranking among the most downloaded in the US Generating significant revenue based on independent analyst coverage …
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