Firy (FIRY) wins $719M judgment as Q2 net loss widens
Firy Inc. (FIRY), parent of Skillz and RZR, reported Q2 2026 revenue of $30,992 thousand, up about 23% from Q2 2025, with first‑half 2026 revenue of $60,097 thousand versus $47,111 thousand a year earlier. Skillz contributed $20,771 thousand and RZR $10,349 thousand this quarter, with RZR generating positive Adjusted EBITDA of $1,930 thousand and Skillz slightly positive at $583 thousand, while corporate costs kept total Adjusted EBITDA at a loss of $13,553 thousand.
The company remains loss‑making, with a Q2 2026 net loss of $24,475 thousand (vs. $17,922 thousand) and a six‑month net loss of $35,420 thousand. Cash, cash equivalents and restricted cash were $164,991 thousand at June 30, 2026, down from $195,513 thousand at year‑end, after $24,652 thousand of operating cash outflow in the first half. Total stockholders’ equity declined to $84,468 thousand, with an accumulated deficit of $1,127,086 thousand, while $129,671 thousand of 10.25% Senior Secured Notes remained outstanding, all classified as current.
Firy discloses significant legal developments. A federal court entered a final judgment awarding Skillz $719 million in disgorgement of unjust profits plus about $10.1 million in fees and costs against Papaya Gaming, which the company plans to pursue, though timing and ultimate recovery are uncertain. The company also continues to receive annual $7.5 million royalty payments under the AviaGames settlement through 2028. Other ongoing matters include disputes with Tether Studios and Voodoo SAS, and an indirect tax exposure of $8,371 thousand, which could affect results depending on outcomes.
Positive
- Revenue growth over 20%: Q2 2026 revenue rose to $30,992 thousand from $25,214 thousand, and first‑half revenue increased to $60,097 thousand from $47,111 thousand, driven by both Skillz and RZR.
- Improving segment profitability: RZR delivered positive Adjusted EBITDA of $1,930 thousand in Q2 2026 versus a loss in 2025; Skillz turned slightly positive at $583 thousand, indicating better unit economics at the segment level.
- Large Papaya judgment: A final judgment awards Skillz $719 million in disgorgement of unjust profits plus about $10.1 million in fees and costs, creating a potentially significant future cash inflow, subject to collection and appeals.
- Cash runway improved vs prior year burn: Operating cash outflow for the first half was $24,652 thousand, better than $31,741 thousand a year earlier, while cash, cash equivalents and restricted cash remained substantial at $164,991 thousand.
Negative
- Widening net losses: Q2 2026 net loss increased to $24,475 thousand from $17,922 thousand, and first‑half net loss was $35,420 thousand, reflecting higher operating costs, particularly general and administrative expenses.
- Equity erosion and large accumulated deficit: Stockholders’ equity declined to $84,468 thousand from $111,820 thousand at year‑end, and accumulated deficit reached $1,127,086 thousand, highlighting sustained historical losses.
- Significant leverage maturing in 2026: The company has $129,671 thousand of 10.25% Senior Secured Notes outstanding, all classified as current at June 30, 2026, creating refinancing or repayment pressure despite a subsequent partial redemption.
- Cash balance trending down: Cash, cash equivalents and restricted cash fell to $164,991 thousand from $195,513 thousand over six months, and total operating, investing and financing activities used $31,124 thousand of cash in the first half.
- Customer and developer concentration risk: Two RZR customers accounted for about 29% of accounts receivable, and games from two developer partners represented 63–68% of consolidated revenue, increasing dependence on a small number of counterparties.
- Ongoing legal and tax exposures: Active disputes, including the Tether Studios and Voodoo matters, a consumer class action, and indirect tax liabilities of $8,371 thousand, could lead to additional costs depending on how they are resolved.
Filing Explained
Firy reports a completed
Key Figures
Q2 2026 Revenue: $30,992 thousand
Q2 2026 Net Loss: $24,475 thousand
Cash, cash equivalents and restricted cash: $164,991 thousand
+5 more
8 metrics
Q2 2026 Revenue
$30,992 thousand
Three months ended June 30, 2026, consolidated revenue
Q2 2026 Net Loss
$24,475 thousand
Three months ended June 30, 2026 net loss
Cash, cash equivalents and restricted cash
$164,991 thousand
Balance at June 30, 2026
Senior Secured Notes outstanding
$129,671 thousand
Principal amount of 2021 Senior Secured Notes at June 30, 2026
Stockholders’ equity
$84,468 thousand
Total stockholders’ equity at June 30, 2026
Papaya disgorgement judgment
$719,000 thousand
Disgorgement of unjust profits awarded July 27, 2026, excluding fees and costs
Operating cash outflow
$24,652 thousand
Net cash used in operating activities, six months ended June 30, 2026
Adjusted EBITDA Q2 2026
$(13,553) thousand
Total company Adjusted EBITDA for the three months ended June 30, 2026
Key Terms
Adjusted EBITDA, Senior Secured Notes, disgorgement of unjust profits, end-user engagement marketing, +2 more
6 terms
Adjusted EBITDA financial
"The CODM evaluates operating performance and allocates resources based on Adjusted EBITDA."
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Senior Secured Notes financial
"On December 20, 2021, the Company issued $300 million of 10.25% secured notes (the “2021 Senior Secured Notes”)"
Senior secured notes are loans a company sells to investors that are backed by specific assets and given first priority for repayment if the company defaults. Because they have a claim on collateral and are paid before other debts, they usually offer lower risk and correspondingly lower interest than unsecured debt; investors use them to judge how safe repayment and recovery of principal might be, like holding a mortgage instead of an unsecured credit card balance.
disgorgement of unjust profits financial
"the court issued an opinion and order awarding $719 million in disgorgement of unjust profits, plus approximately $10.1 million in fees"
end-user engagement marketing financial
"For the Skillz segment, end-user engagement marketing represents the cost of incentives provided to end users"
demand-side platform technical
"RZR is an artificial-intelligence-powered demand-side platform that provides data-driven user acquisition"
A demand-side platform is an automated tool advertisers use to buy digital ad space across many websites and apps in real time, combining audience data, budgets and bidding rules to decide where and when ads appear. It matters to investors because DSPs make ad spending more efficient and measurable—improving targeting, lowering wasted spend and enabling faster scaling—so businesses that operate or rely on them can show stronger revenue efficiency and more predictable marketing returns.
valuation allowance financial
"offset by a full valuation allowance on our deferred tax assets."
A valuation allowance is a reserve set aside to reduce the value of certain assets on a company's financial records when there is uncertainty about whether they will generate the expected benefits. It acts like a caution sign, indicating that some assets might not be fully recoverable or worth their recorded amount. This matters to investors because it provides a more realistic picture of a company's financial health and potential risks.
Earnings Snapshot
Revenue: $30,992 thousand (Q2); $60,097 thousand (six months)
Quarter and six months ended June 30, 2026
Revenue
$30,992 thousand (Q2); $60,097 thousand (six months)
Up from $25,214 thousand and $47,111 thousand in prior-year periods
Net loss
$24,475 thousand (Q2); $35,420 thousand (six months)
From $17,922 thousand and $35,064 thousand in prior-year periods
Adjusted EBITDA
$(13,553) thousand (Q2); $(26,330) thousand (six months)
Versus $(11,427) thousand and $(28,683) thousand in prior-year periods
FAQ
How did FIRY Inc. (FIRY) perform financially in Q2 2026?
Firy reported Q2 2026 revenue of $30,992 thousand, up from $25,214 thousand, but a larger net loss of $24,475 thousand versus $17,922 thousand. First‑half 2026 revenue reached $60,097 thousand with a net loss of $35,420 thousand.
What are the key revenue drivers for FIRY (FIRY) across Skillz and RZR?
In Q2 2026, Skillz generated $20,771 thousand of revenue, mainly from entry fees and related services, while RZR produced $10,349 thousand from advertising. Both segments grew year over year, and RZR delivered positive Adjusted EBITDA of $1,930 thousand.
What is FIRY’s (FIRY) cash position and debt load as of June 30, 2026?
Firy held $164,991 thousand in cash, cash equivalents and restricted cash and reported total assets of $271,695 thousand. It had $129,671 thousand of 10.25% Senior Secured Notes outstanding, all classified as current, increasing near‑term refinancing or repayment needs.
How significant is the Papaya Gaming judgment for FIRY (FIRY)?
A U.S. court entered a final judgment awarding Skillz $719 million in disgorgement of unjust profits plus about $10.1 million in fees and costs. The company plans to pursue collection, though the timing and amount of ultimate recovery remain uncertain.
What is FIRY’s (FIRY) profitability at the segment level?
In Q2 2026, Skillz posted Adjusted EBITDA of $583 thousand, improving from a loss, while RZR achieved $1,930 thousand of Adjusted EBITDA. Corporate expenses of $16,066 thousand drove total Adjusted EBITDA to a loss of $13,553 thousand for the quarter.
What share repurchases has FIRY (FIRY) executed and what capacity remains?
Under its share repurchase program, Firy bought back 1.4 million shares for $7.7 million in the first half of 2025, but none in the first half of 2026. Remaining authorization was $23.4 million as of June 30, 2026.
How concentrated are FIRY’s (FIRY) customers and developers?
Two RZR customers represented about 29% of accounts receivable at June 30, 2026. Games from two developer partners provided 63% of consolidated revenue in Q2 2026 and 68% for the first half, each partner contributing at least 10%.
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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ______to______
Commission file number: 001-39243
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of principal executive offices) | (Zip Code) | |||||||||||||
(415 ) 762-0511
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
☒ | Smaller reporting company | ||||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 7, 2026, the registrant had outstanding 13,192,194 shares of Class A common stock and 3,430,063 shares of Class B common stock.
TABLE OF CONTENTS
FIRY INC.
TABLE OF CONTENTS
| Page | |||||
PART I - FINANCIAL INFORMATION | |||||
Item 1. Financial Statements (Unaudited) | 1 | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 29 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 35 | ||||
Item 4. Controls and Procedures | 36 | ||||
PART II - OTHER INFORMATION | |||||
Item 1. Legal Proceedings | 38 | ||||
Item 1A. Risk Factors | 38 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 38 | ||||
Item 3. Defaults Upon Senior Securities | 38 | ||||
Item 4. Mine Safety Disclosures | 38 | ||||
Item 5. Other Information | 38 | ||||
Item 6. Exhibits | 38 | ||||
Signatures | 39 | ||||
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except for number of shares and par value per share amounts)
| June 30, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Non-current assets: | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets, net | |||||||||||
| Non-marketable equity securities | |||||||||||
| Restricted cash, non-current | |||||||||||
| Other non-current assets | |||||||||||
| Total non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Operating lease liabilities, current | |||||||||||
| Current portion of long-term debt | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Non-current liabilities: | |||||||||||
| Operating lease liabilities, non-current | |||||||||||
| Other non-current liabilities | |||||||||||
| Total non-current liabilities | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 8) | |||||||||||
| Stockholders’ equity: | |||||||||||
Preferred stock $ | |||||||||||
Common stock $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive income (loss) | ( | ||||||||||
| Accumulated deficit | ( | ( | |||||||||
Treasury stock at cost, | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
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FIRY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited, in thousands, except for number of shares and per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Gain from litigation settlement | ( | ( | |||||||||||||||||||||
| Total costs and expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
| Interest expense, net of interest income | ( | ( | ( | ( | |||||||||||||||||||
| Other (expense) income, net | ( | ( | ( | ( | |||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Provision for (benefit from) income taxes | ( | ||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Loss per share attributable to common stockholders: | |||||||||||||||||||||||
Basic | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Other comprehensive income: | |||||||||||||||||||||||
| Foreign currency translation gain | |||||||||||||||||||||||
| Total other comprehensive income | |||||||||||||||||||||||
| Total comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
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FIRY INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except for number of shares)
| Common stock | Additional paid-in capital | Accumulated other comprehensive loss (income) | Accumulated deficit | Treasury Stock | Total stockholders’ equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2026 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock vesting, net of shares withheld | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | $ | ( | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock vesting, net of shares withheld | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased | ( | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased | ( | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
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FIRY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| Six Months Ended June 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Operating Activities | ||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Stock-based compensation | ||||||||||||||
| Accretion of unamortized debt discount and amortization of debt issuance costs | ||||||||||||||
| Non-cash lease expense | ||||||||||||||
| Provision for (recoveries of) bad debt | ( | |||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable, net | ( | ( | ||||||||||||
| Prepaid expenses and other assets | ||||||||||||||
| Accounts payable | ( | ( | ||||||||||||
| Operating lease liabilities | ( | ( | ||||||||||||
| Other accruals and liabilities | ( | |||||||||||||
| Net cash used in operating activities | ( | ( | ||||||||||||
| Investing Activities | ||||||||||||||
| Purchases of property and equipment | ( | ( | ||||||||||||
| Capitalization of software development costs | ( | ( | ||||||||||||
| Asset acquisitions | ( | |||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| Financing Activities | ||||||||||||||
| Principal payments on finance leases obligations | ( | |||||||||||||
| Repurchase of common stock | ( | |||||||||||||
| Proceeds from exercise of stock options | ||||||||||||||
| Restricted stock vesting, net of shares withheld | ( | |||||||||||||
| Net cash used in financing activities | ( | ( | ||||||||||||
| Effect of exchange rates on cash and cash equivalents | ||||||||||||||
| Net change in cash, cash equivalents and restricted cash | ( | ( | ||||||||||||
| Cash, cash equivalents and restricted cash – beginning of year | ||||||||||||||
| Cash, cash equivalents and restricted cash – end of period | $ | $ | ||||||||||||
| Supplemental cash disclosures | ||||||||||||||
| Cash paid for interest | $ | $ | ||||||||||||
| Cash paid for taxes, net of refunds received | $ | $ | ||||||||||||
| Supplemental non-cash disclosures | ||||||||||||||
| Purchases of property and equipment included in accounts payable | $ | $ | ||||||||||||
| Asset acquisition consideration included in other accruals and liabilities | $ | $ | ||||||||||||
| Stock-based compensation capitalized in software development costs | $ | $ | ||||||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
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FIRY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
1. Description of the Business and Basis of Presentation
Business
Firy Inc. (the “Company,” “Firy,” “we,” “us,” or “our”) is a global holding company and the parent of its operating businesses, including Skillz and RZR. Firy is built to fuel business potential and operates at the intersection of content, identity, commerce and performance marketing. The Company leverages first-party data, enterprise-scale infrastructure and scalable operating systems, with a disciplined focus on capital efficiency and long-term value creation.
Skillz operates a proprietary, online-hosted, multi-player platform that enables players worldwide to compete in games (“Competitions”). The platform hosts both games developed by third-party developers and games that Skillz itself owns and operates. Skillz provides third-party developers with a software development kit (“SDK”) that they download and integrate with their existing games. The SDK serves as a data interface between Skillz, developers and players that enables Skillz to provide monetization services, including end-user registration services, player matching, fraud and fair play monitoring, and billing and settlement services. In addition to enabling third-party developers, Skillz develops, publishes, and operates its own first-party games on the platform, which represents a meaningful portion of platform activity.
In March 2026, the Company’s Aarki business rebranded as RZR. The rebrand reflects expanded capabilities and market positioning; there was no change to the entity’s legal structure or control. RZR is an artificial-intelligence-powered demand-side platform that provides data-driven user acquisition, retargeting, and advertising optimization services across mobile and other digital channels. RZR applies proprietary machine learning models to improve advertising performance for its customers.
Basis of Presentation
The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The Company believes the disclosures made are adequate to make the information presented not misleading.
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are, in the opinion of the Company’s management, necessary for the fair presentation of the results of operations for the interim periods.
Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Reclassifications
Certain prior year amounts have been reclassified or changed to conform to the current-year presentation. Such reclassifications had no impact on previously reported net loss.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the amounts reported in these condensed consolidated financial statements and the accompanying notes. Estimates are used in several areas including, but not limited to, end-user incentives, including Bonus Cash and Ticketz accruals, indirect tax liabilities, the fair value of non-marketable securities, and the impairment of long-lived assets. The Company bases these estimates on historical experience and various other assumptions
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FIRY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities. The actual results may materially differ from these estimates.
Revenue Recognition
The Company recognizes revenue for its services in accordance with the FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). For additional information, see Note 3, “Revenue”.
Cost of Revenue
Cost of revenue primarily consists of third-party payment processing fees, server costs, amortization of developed technology, personnel expenses, direct software costs, amortization of internal use software, hosting expenses, and allocation of shared facility and other costs.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents consist of cash, commercial paper, money market funds and U.S. government agency securities with maturities of three months or less when purchased.
Restricted cash consists of cash maintained under an agreement that legally restricts the use of such funds.
The following table provides a reconciliation of the Company’s cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheets that sum to the total of the same such amount shown on the condensed consolidated statements of cash flows for the six months ended June 30, 2026:
| June 30, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| Cash, cash equivalents and restricted cash | |||||||||||
| Cash | $ | $ | |||||||||
| Money market funds | |||||||||||
| Restricted cash - non-current | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash, cash equivalents, restricted cash, and marketable securities. Although the Company deposits its cash with multiple established financial institutions, the deposits, at times, may exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents. The Company limits the amount of credit exposure to any one issuer and monitors the financial condition of the financial institutions on a regular basis.
Accounts Receivable, Net
Accounts receivable, net, primarily consist of amounts recorded for programmatic media campaigns, net of an allowance for credit losses from our advertising revenue customers of our RZR segment. The allowance for credit losses is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the condensed consolidated statements of operations and comprehensive loss. The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when there are specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status and makes judgments about the creditworthiness of customers based on ongoing credit evaluations. The Company also considers customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
The activity in our allowance for credit losses for the six months ended June 30, 2026 and 2025 is as follows:
| 2026 | 2025 | ||||||||||
| Beginning balance for credit losses | $ | $ | |||||||||
| Provision for bad debt | |||||||||||
| Recoveries | ( | ||||||||||
| Ending balance for credit losses | $ | $ | |||||||||
Two customers of RZR accounted for approximately 29 % of the accounts receivable balance as of June 30, 2026, with each customer accounting for at least 10% of the total.
Four customers of RZR accounted for approximately 46 % of the accounts receivable balance as of December 31, 2025, with each customer accounting for at least 10% of the total.
Long-Lived Assets
Long-lived assets primarily consist of property and equipment with estimable useful lives subject to depreciation and amortization.
The Company owns its office building in Las Vegas, Nevada that serves as its headquarters with costs allocated to building and land components. The building is depreciated on a straight-line basis over its estimated useful life of 39 years and the land is not subject to depreciation.
Investments
The Company considers all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year are classified as non-current marketable securities. Dividend and interest income are recognized when earned.
Non-marketable equity securities are investments in privately held companies without readily determinable fair values. We have accounted for these investments using the measurement alternative. Under the measurement alternative, the equity investment is initially recorded as its allocated cost, but the carrying value may be adjusted through earnings upon an impairment or when there is an observable price change involving the same or a similar investment with the same issuer. The carrying value of the Company’s investments without readily determinable fair values was $52.8
The Company did not record any other adjustments to the carrying value of its non-marketable equity securities accounted for under the measurement alternative and did not recognize any gains or losses related to the sale of non-marketable equity securities for the three and six months ended June 30, 2026 and 2025, respectively.
Investment Components
Investments consisted of the following as of June 30, 2026 and December 31, 2025:
| As of June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Cost Basis | Unrealized Gains | Unrealized Losses | Fair Value | Cash and Cash Equivalents | Marketable Securities - Current | Marketable Securities - Non-current | ||||||||||||||||||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Total investments | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
| As of December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Cost Basis | Unrealized Gains | Unrealized Losses | Fair Value | Cash and Cash Equivalents | Marketable Securities - Current | Marketable Securities - Non-current | |||||||||||||||||||||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
| Total investments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Advertising and Promotional Expense
User Acquisition
Interest Expense, Net of Interest Income
Interest expense, net of interest income, consisted of the following for the three and six months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Interest expense, net of interest income | |||||||||||||||||||||||
| Interest expense | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Interest income | |||||||||||||||||||||||
| Total interest expense, net of interest income | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Indirect Tax Liabilities
401(k) Plan
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
Recently Adopted Accounting Standards and Updates
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires public entities to disclose specific tax rate reconciliation categories, as well as income taxes paid disaggregated by jurisdiction, amongst other disclosure enhancements. ASU 2023-09 is effective for financial statements issued for annual periods beginning after December 15, 2024. The amendments in ASU 2023-09 should be applied on a prospective basis and retrospective application is permitted. The Company adopted this update in the fourth quarter of 2025 and has prospectively applied the disclosure requirement in its consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires public entities to disclose disaggregated information about certain costs and expenses in the notes to their financial statements in both annual and interim filings. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The amendments in ASU 2024-03 can be applied either prospectively or retrospectively. The Company is currently evaluating the disclosure requirements related to this accounting standard update.
In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which modernizes the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introduces a more judgment-based approach. ASU 2025-06 is effective for financial statements issued for annual periods beginning after December 15, 2027 and interim periods within those fiscal years. The amendments in ASU 2025-06 can be early adopted and should be applied using either the prospective, modified, or retrospective transition approach. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
3. Revenue
The following tables present the Company’s revenues, disaggregated by offering, geographical region, and reportable segment for the three and six months ended June 30, 2026 and 2025. Revenue by geographical region is based on the location where the game developer or advertising customer is headquartered. Revenue is recognized net of any taxes from customers (e.g., sales and other indirect taxes), which are subsequently remitted to governmental entities. For more information on revenues presented by reportable segment, see Note 12, “Segment Reporting”.
| Three Months Ended June 30, 2026 | |||||||||||||||||
| Skillz | RZR | Total | |||||||||||||||
| Revenue From Customers: | |||||||||||||||||
| Entry Fee Revenue | $ | $ | $ | ||||||||||||||
| Advertising Revenue | |||||||||||||||||
| Other Revenue: | |||||||||||||||||
| Subscription Service Revenue | |||||||||||||||||
| Maintenance Fee Revenue | |||||||||||||||||
| Total Revenue | $ | $ | $ | ||||||||||||||
| United States | $ | $ | $ | ||||||||||||||
| Other Countries | |||||||||||||||||
| Total Revenue | $ | $ | $ | ||||||||||||||
Elimination(1) | ( | ||||||||||||||||
| Consolidated | $ | ||||||||||||||||
1.Elimination of RZR intercompany revenues, which were generated within the United States.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
| Three Months Ended June 30, 2025 | |||||||||||||||||
| Skillz | RZR | Total | |||||||||||||||
| Revenue From Customers: | |||||||||||||||||
| Entry Fee Revenue | $ | $ | $ | ||||||||||||||
| Advertising Revenue | |||||||||||||||||
| Other Revenue: | |||||||||||||||||
| Maintenance Fee Revenue | |||||||||||||||||
| Total Revenue | $ | $ | $ | ||||||||||||||
| United States | $ | $ | $ | ||||||||||||||
| Other Countries | |||||||||||||||||
| Total Revenue | $ | $ | $ | ||||||||||||||
Elimination(1) | ( | ||||||||||||||||
| Consolidated | $ | ||||||||||||||||
1.Elimination of RZR intercompany revenues, which were generated within the United States.
| Six Months Ended June 30, 2026 | |||||||||||||||||
| Skillz | RZR | Total | |||||||||||||||
| Revenue From Customers: | |||||||||||||||||
| Entry Fee Revenue | $ | $ | $ | ||||||||||||||
| Advertising Revenue | |||||||||||||||||
| Other Revenue: | |||||||||||||||||
| Subscription Service Revenue | |||||||||||||||||
| Maintenance Fee Revenue | |||||||||||||||||
| Total Revenue | $ | $ | $ | ||||||||||||||
| United States | $ | $ | $ | ||||||||||||||
| Other Countries | |||||||||||||||||
| Total Revenue | $ | $ | $ | ||||||||||||||
Elimination(1) | ( | ||||||||||||||||
| Consolidated | $ | ||||||||||||||||
1.Elimination of RZR intercompany revenues, which were generated within the United States.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
| Six Months Ended June 30, 2025 | |||||||||||||||||
| Skillz | RZR | Total | |||||||||||||||
| Revenue From Customers: | |||||||||||||||||
| Entry Fee Revenue | $ | $ | $ | ||||||||||||||
| Advertising Revenue | |||||||||||||||||
| Other Revenue: | |||||||||||||||||
| Maintenance Fee Revenue | |||||||||||||||||
| Total Revenue | $ | $ | $ | ||||||||||||||
| United States | $ | $ | $ | ||||||||||||||
| Other Countries | |||||||||||||||||
| Total Revenue | $ | $ | $ | ||||||||||||||
Elimination(1) | ( | ||||||||||||||||
| Consolidated | $ | ||||||||||||||||
1.Elimination of RZR intercompany revenues, which were generated within the United States.
Revenues from Entry Fees
The Company generates revenues through its competition-based Skillz segment by providing a service to game developers for monetization of their game content. The monetization service provided by Skillz allows developers to offer multi-player competition to their end-users for the purpose of end-user retention and engagement. Skillz provides developers with a software development kit (“SDK”) 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. In addition to services provided to game developers, Skillz develops, publishes, and operates its own first-party games on the platform. There have been no material changes from the revenue recognition accounting policies previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 except for the revenue recognition accounting policies related to our owned and operated games, which now represent a meaningful portion of platform activity.
Games provided by two developer partners accounted for 63 % and 68 % of the Company’s consolidated revenue for the three and six months ended June 30, 2026, respectively, with each developer partner accounting for at least 10% of the total.
Games provided by three developer partners accounted for 69 % and 70 % of the Company’s consolidated revenue for the three and six months ended June 30, 2025, respectively, with each developer partner accounting for at least 10% of the total.
End-User Incentive Programs
To drive traffic to its platform, the Company provides promotions and incentives to end-users in various forms. Evaluating whether a promotion or incentive is a payment to a customer may require significant judgment. Certain promotions and incentives, which are consideration payable to customers, are recognized as a reduction of revenue at the later of when revenue is recognized or when the Company pays or promises to pay the incentive. The Company recognized a reduction of revenue related to these end-user incentives of $3.2 million and $4.2 million for the three and six months ended June 30, 2026, respectively, and $2.0 million and $4.8 million for the three and six months ended June 30, 2025, respectively.
Promotions and incentives recorded as sales and marketing expenses are recognized when we incur the related cost. The Company recognized sales and marketing expense related to end-user incentives of $5.9 million and $13.5 million for the three and six months ended June 30, 2026, respectively, and $8.1 million and $17.6 million for the three and six months ended June 30, 2025, respectively.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
From time to time, the Company issues credits or refunds to end-users who are dissatisfied with the level of service provided by the game developer. There is no contractual obligation for the Company to refund such end-users nor is there a valid expectation by game developers for the Company to issue such credits or refunds to end-users on their behalf. The Company accounts for credits or refunds, which are not recoverable from the game developer, as sales and marketing expenses when incurred.
Advertising Revenue
The Company offers a technology platform (i.e., demand-side platform, “DSP”) to source available advertising space from its network of vendors / suppliers (aka, advertising exchange partners / publishers), which uses a real-time auction process, to provide user acquisition and retargeting solutions for its customers. Revenue from advertising is recognized based on the number of impressions delivered on behalf of the customer as the performance obligation is satisfied. The Company considers itself the agent of its customer(s) based on the Company’s role in programmatically sourcing and placing advertisements on behalf of customers via a network of third-party publishers. The Company does not, at any time, take ownership of the advertising inventory being sourced and placed. Via the DSP, if the Company wins the auction and an impression is served, the customer’s advertisement is displayed on the publisher / supplier’s mobile application. There have been no material changes from the revenue recognition accounting policies previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
For performance obligations related to advertising revenue, customers are typically extended 30 day payment terms from completion of each month’s insertion order and no advertising revenue customers accounted for more than 10% of the Company’s revenue for the three and six months ended June 30, 2026 and 2025, respectively.
The Company recognizes an asset for incremental costs of obtaining a contract with the customer as long as management expects to recover these costs. Incremental costs are those that would have not been incurred if the contract did not exist. Examples of incremental costs often capitalized are sales commissions, whereas examples of costs that would not be included are internal employee salaries, standard benefits, travel costs, and other / general legal costs. Sales commissions are the only incremental contract costs the Company incurs and are paid based on collected revenue based on the recipient’s assigned accounts. As commissions are typically satisfied within one year after an executed contract, the Company applies the practical expedient to expense these costs as incurred.
Subscription Service Revenue
The Company offers a modern backend and live operations platform, which is purpose-built for scalable, live-service games. Revenue from subscription services is recognized over the term of the contract.
Maintenance Fee Revenue
When a player becomes inactive on the platform by not participating in a tournament for six consecutive months, the Company imposes a monthly maintenance fee. This fee is charged to the player and recognized as revenue by the Company beginning in the seventh month of inactivity.
4. Leases
The Company is a party to various non-cancelable operating lease agreements for certain of its offices. The leases have original lease periods expiring between 2026 to 2031. Some leases include one or more options to renew. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. The lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.
The Company has elected the short-term lease recognition exemption for all leases that qualify. For leases with an initial term of 12 months or less that do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise, the Company does not recognize ROU assets or lease liabilities. Instead, lease payments for short-term leases are recognized as expense on a straight-line basis over the lease term.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
The components of lease costs, lease term and the discount rate were as follows for the three and six months ended June 30, 2026 and 2025, respectively:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Finance leases | |||||||||||||||||||||||
| Amortization of assets under finance leases | $ | $ | $ | $ | |||||||||||||||||||
| Interest | |||||||||||||||||||||||
| Total finance lease costs | $ | $ | $ | $ | |||||||||||||||||||
| Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||
| Variable lease cost | $ | $ | $ | $ | |||||||||||||||||||
| Short-term lease rent expense | $ | $ | $ | $ | |||||||||||||||||||
| June 30, | December 31, | ||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Weighted-average remaining lease term | |||||||||||||||||||||||
| Operating leases | |||||||||||||||||||||||
| Finance leases | |||||||||||||||||||||||
| June 30, | December 31, | ||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Weighted-average discount rate | |||||||||||||||||||||||
| Operating leases | % | % | |||||||||||||||||||||
| Finance leases | % | % | |||||||||||||||||||||
Supplemental cash flow information related to leases for the three and six months ended June 30, 2026 and 2025, respectively:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||||||||
| Payments for operating leases included in cash from operating activities | $ | $ | $ | $ | |||||||||||||||||||
| Payments for finance leases included in cash from operating activities | $ | $ | $ | $ | |||||||||||||||||||
| Payments for finance leases included in cash from financing activities | $ | $ | $ | $ | |||||||||||||||||||
| Assets obtained in exchange for lease obligations: | |||||||||||||||||||||||
| Operating leases | $ | $ | $ | $ | |||||||||||||||||||
| Finance leases | $ | $ | $ | $ | |||||||||||||||||||
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
The following table outlines future minimum lease payments under the Company’s non-cancellable leases as of June 30, 2026:
Operating Leases | |||||
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 | |||||
| Total undiscounted cash flows | |||||
| Less: Imputed interest | ( | ||||
| Present value of lease liabilities | $ | ||||
| Lease liabilities, current | $ | ||||
| Lease liabilities, non-current | |||||
| Present value of lease liabilities | $ | ||||
As of June 30, 2026, the Company does not have any operating or finance leases which have not yet commenced.
5. Balance Sheet Components
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following as of June 30, 2026 and December 31, 2025:
| June 30, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| Credit card processing reserve | $ | $ | |||||||||
| Prepaid expenses | |||||||||||
| Other current assets | |||||||||||
| Prepaid expenses and other current assets | $ | $ | |||||||||
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
Property and Equipment, Net
Property and equipment consisted of the following as of June 30, 2026 and December 31, 2025:
| June 30, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| Land | $ | $ | |||||||||
| Building | |||||||||||
| Capitalized internal-use software | |||||||||||
| Computer equipment and servers | |||||||||||
| Furniture and fixtures | |||||||||||
| Leasehold improvements | |||||||||||
| Construction in progress | |||||||||||
| Total property and equipment | |||||||||||
| Accumulated depreciation and amortization | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
Property and equipment, net by geography was as follows:
| June 30, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| United States | $ | $ | |||||||||
| Other countries | |||||||||||
| Total | $ | $ | |||||||||
Asset Acquisitions
Asset acquisitions are included in other non-current assets on our condensed consolidated balance sheets and consisted of the following as of June 30, 2026 and December 31, 2025:
| June 30, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| Game titles | $ | $ | |||||||||
| Developed technology | |||||||||||
| Total asset acquisitions | |||||||||||
| Accumulated amortization | ( | ||||||||||
| Asset acquisitions, net | $ | $ | |||||||||
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
Other Current Liabilities
Other current liabilities consisted of the following as of June 30, 2026 and December 31, 2025:
| June 30, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| Accrued publisher fees | $ | $ | |||||||||
| End-user liability, net | |||||||||||
| Accrued compensation | |||||||||||
| Indirect tax liabilities | |||||||||||
| Accrued legal expenses | |||||||||||
| Accrued operating expenses | |||||||||||
| Accrued developer revenue share | |||||||||||
| Deferred asset acquisition consideration | |||||||||||
| Accrued interest expenses | |||||||||||
| Accrued sales and marketing expenses | |||||||||||
| Short-term lease obligations | |||||||||||
| Other | |||||||||||
| Other current liabilities | $ | $ | |||||||||
6. Fair Value Measurements
As of June 30, 2026 and December 31, 2025, the recorded values of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of the instruments.
Cash and money market funds are classified within Level 1 of the fair value hierarchy.
Assets measured at fair value on a recurring basis consisted of the following as of June 30, 2026 and December 31, 2025:
| Fair Value Measurements as of June 30, 2026 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Fair Value Measurements as of December 31, 2025 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||||||||||||
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
7. Long-Term Debt
Long-term debt consisted of the following as of June 30, 2026 and December 31, 2025:
| June 30, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| 2021 Senior Secured Notes | $ | $ | |||||||||
| Unamortized discount and issuance costs | ( | ( | |||||||||
| Total debt after discount and issuance costs | |||||||||||
| Current portion of long-term debt | ( | ( | |||||||||
| Long-term debt, net | $ | $ | |||||||||
2021 Senior Secured Notes
On December 20, 2021, the Company issued $300 million of 10.25 % secured notes (the “2021 Senior Secured Notes”) in a private placement to certain institutional buyers. The 2021 Senior Secured Notes are guaranteed by the Company’s domestic restricted subsidiaries. Interest on the 2021 Senior Secured Notes is payable semiannually on June 15 and December 15 of each year, beginning on June 15, 2022. At issuance, the effective interest rate on the 2021 Senior Secured Notes was 12.14 %, and maturity will be on December 15, 2026, unless repurchased or redeemed earlier.
On April 13, 2023, the Company repurchased approximately $159.8 million of its 2021 Senior Secured Notes. After giving effect to the 2023 and other previous open market repurchases, the effective interest rate on the 2021 Senior Secured Notes was 12.09 %.
The 2021 Senior Secured Notes contain customary covenants restricting the Company’s ability to incur debt, incur liens, make distributions to stockholders, make certain transactions with the Company’s affiliates, together with other financial covenants and public filings of the Company’s financial statements. We were in compliance with all covenants applicable to the 2021 Senior Secured Notes as of June 30, 2026 and December 31, 2025, respectively.
Voluntary prepayments are permitted in whole, or in part, in minimum amounts as set forth in the indenture governing the 2021 Senior Secured Notes, with prior notice. Voluntary prepayments made on, or during, the twelve-month period beginning December 15, 2025 are not subject to a prepayment premium.
Debt issuance costs incurred in connection with the 2021 Senior Secured Notes are capitalized and amortized to interest expense over the five-year term using the straight-line method, which approximates the effective interest method. Debt issuance costs are included as contra-liabilities in long-term debt.
Amortization of debt issuance costs and accretion of debt discounts included in interest expense totaled $1.1 million and $0.9 million for the six months ended June 30, 2026 and 2025, respectively.
The 2021 Senior Secured Notes are classified as Level 2 financial instruments and the Company determined the fair value of the notes was $130.0 million as of June 30, 2026 based on secondary market quotes.
The following table outlines maturities of the principal related to the Company’s long-term debt as of June 30, 2026:
| Amount | ||||||||
| Maturities of borrowings | ||||||||
| 2026 | $ | |||||||
| Total | $ | |||||||
On August 14, 2026, the Company redeemed $80.0 million in aggregate principal amount of the Company’s outstanding 2021 Senior Secured Notes. Refer to Note 14, “Subsequent Events” for further discussion.
8. Commitments and Contingencies
Legal Matters
The Company is a party to certain claims, suits, and proceedings which arise in the ordinary course and conduct of its business and has certain unresolved claims pending, the outcomes of which are not determinable at this time. The Company records a liability when it believes that it is probable that a loss will be incurred and the amount can be reasonably estimated. If the
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
Company determines that a loss is reasonably possible and the loss or range of loss can be reasonably estimated, the Company discloses the possible loss or range of loss. Given the unpredictable nature of legal proceedings, there is a reasonable possibility that an unfavorable resolution of one or more such proceedings could in the future materially affect the results of operations, cash flows, or financial position in a particular period. The Company records legal fee expenses associated with such matters when the relevant services are provided.
Skillz v. AviaGames
On February 9, 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, on April 5, 2021 (“Patent Case”). The jury found in favor of Skillz on all issues, determining AviaGames willfully infringed Skillz’s U.S. Patent No. 9,649,564, entitled “Peer-to-Peer Wagering Platform” (the “‘564 patent”) and awarding Skillz its full damages request of $42.9 million. After the jury verdict was issued, Skillz requested certain post-trial relief, including that the Court permanently enjoin AviaGames from continuing to infringe the ‘564 patent, award Skillz its attorneys’ fees due to the exceptional nature of the case, and treble the damages awarded by the jury. In addition, Skillz, along with game developer Big Run Studios, Inc. (“Big Run”), brought a separate case against AviaGames for false advertising, copyright infringement, and violations of California’s state unfair competition law in federal court in San Francisco, California (“Unfair Competition Case”). On April 13, 2024, Skillz, Big Run, and AviaGames entered into a settlement agreement with respect to both the Patent Case and Unfair Competition Case pending against AviaGames (the “Litigation Settlement”). In exchange for dismissal of both actions and other settlement terms, AviaGames agreed to pay Skillz and Big Run a total of $80.0 million. On April 12, 2024, the Company and Big Run Studio entered into a Side Letter Agreement providing that a portion of the AviaGames settlement funds allocated to Big Run Studio be utilized to repay the outstanding principal and accrued interest under a loan and security agreement totaling $2.0 million.
During the year ended December 31, 2024, 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. Of the $4.0 million allocated to Big Run under the Side Letter Agreement, Big Run received $2.0 million net of the settlement of the loan and security agreement. 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 ‘564 patent and its patent family; no portion of these payments are due to Big Run.
During the three months ended March 31, 2026 and 2025, the Company recorded a gain from the Litigation Settlement of $7.5 7.5 million each year through March 2028. Since gain contingencies are not recognized until realized, the Company recognizes amounts under the settlement as a gain when payment is received. The remaining scheduled payments of $15.0 million, consisting of $7.5 million payable in each of March 2027 and March 2028, have not been recognized in the accompanying condensed consolidated financial statements.
Skillz v. Tether Studios, et al.
On August 29, 2025, the Company received a notice (“Notice”) from Tether Studios, LLC (“Tether”) indicating that Tether is terminating all of its agreements with the Company (“Tether Agreements”), including the Company’s Developer Terms and Conditions of Service, as amended, effective as of September 1, 2025. The Company believes the termination notice for cause is invalid and that Tether breached its obligations under the Tether Agreements. Certain of the Tether Agreements restrict the removal of two games covered thereby, Solitaire Cube and 21 Blitz, from the Company’s platform for at least 18 months following termination.
Following receipt of the Notice, on September 1, 2025, the Company 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. On October 3, 2025, the Company filed a first amended complaint in the Court of Chancery of the State of Delaware alleging additional breaches of contract and damages. On October 10, 2025, Tether filed its answer to Skillz’s first amended complaint and also asserted counterclaims against Skillz for breach of contract, breach of the implied covenant of good faith trademark infringement, and under Delaware’s deceptive trade practices act. On March 3, 2026, Skillz filed a second amended complaint, adding Aim Games, LLC (“Aim Games”) to the complaint, which Skillz alleges is an alter ego or controlled affiliate of Tether. Skillz alleges that Aim Games impermissibly hosted monetization services for Tether’s games in violation of the Tether Agreements. Skillz asserted breach of contract claims against both Tether and Aim Games, and tortious interference claims against Aim Games. Skillz seeks equitable relief and damages arising out of its claims. The deadline to serve written discovery requests was June 17, 2026, with document production due July 30, 2026. Fact discovery is scheduled to conclude on
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
September 2, 2026, and expert discovery is due October 28, 2026. Trial is currently scheduled for December 2-4, 2026, but is likely to be delayed until 2027, as the parties have scheduled a court-ordered mediation for September 9, 2026. Based on the information known by the Company, any such estimated loss range is not possible to determine.
Hanna v. Paradise, et al.
In March 2024, an alleged stockholder filed a putative derivative complaint, Hanna v. Paradise, et al., No. 2024-0228-KSJM, in the Delaware Court of Chancery, purportedly on behalf of Skillz against certain of Skillz’s current and former officers, directors, and certain stockholders. The complaint alleges breaches of fiduciary duties, aiding and abetting breaches of fiduciary duties, and unjust enrichment arising out of Skillz’s March 2021 underwritten secondary public offering. The complaint asserts that certain of the director and officer defendants breached fiduciary duties to Skillz by allegedly inappropriately selling stock as part of the public offering while in possession of material, non-public information, that the stockholder defendants aided and abetted these alleged breaches of fiduciary duties, and that all defendants were unjustly enriched by their sales in the public offering. The complaint seeks unspecified damages and restitution for Skillz from the defendants and the payment of costs and attorneys’ fees. Defendants moved to dismiss the complaint on June 6, 2024. Plaintiffs responded by voluntarily dismissing 55 of the stockholder defendants but opposing the motion as to all remaining defendants. Briefing on the motion to dismiss was completed at the end of August 2024. The court heard oral arguments on the motion to dismiss on January 7, 2025. On July 3, 2025, the court issued a ruling converting defendants’ motion to dismiss on demand futility grounds to a motion for summary judgment and ordered limited discovery on the independence of a former Skillz director. The court stayed consideration of defendants’ other dismissal arguments given its ultimate ruling on the demand futility issue could moot these other dismissal arguments. On June 24, 2026, the plaintiff filed a Stipulation and Order of Voluntary Dismissal, with prejudice, dismissing the lawsuit in its entirety.
Skillz vs. Voodoo SAS, et al.
On July 1, 2024, Skillz filed suit against Voodoo SAS and two affiliate entities, Esport Newco SAS and Esport Newco US Corp. (collectively, "Voodoo") in the United States District Court for the Southern District of New York. In its complaint, Skillz asserts violations of the Lanham Act's prohibition of false advertising and New York's General Business Law § 349 based on, inter alia, Skillz’s allegations that Voodoo advertises its mobile games offered through the “Blitz Win Cash” application as “fair,” “skill-based,” and for “real players only” when in reality Voodoo is fixing the outcome of its tournaments through the use of computer algorithms or “bots.” On August 22, 2024, Skillz brought a motion for a preliminary injunction, and on September 18, 2024, Voodoo moved to dismiss the complaint or, in the alternative, to strike certain allegations. Skillz’s and Voodoo’s motions were both mooted when Skillz amended its complaint on October 2, 2024. On October 8, 2024, Skillz renewed its motion for a preliminary injunction and expedited discovery based on the amended complaint, and Voodoo moved to dismiss the amended complaint on October 16, 2024. Voodoo’s motion to dismiss is fully briefed and awaiting a decision by the court. The court denied Skillz’s motion for preliminary injunction. On July 23, 2025, the court denied Voodoo’s motion to stay discovery pending a decision on the motion to dismiss and to bifurcate proceedings to focus on damages only. The court entered an order on April 9, 2026 extending fact discovery to close on August 14, 2026 and depositions to be completed by November 20, 2026. Both parties have served written discovery requests and are proceeding with fact discovery.
Skillz vs. Papaya Gaming, Ltd., et al.
In March 2024, Skillz sued Papaya Gaming, Ltd. and Papaya Gaming, Inc. (collectively, “Papaya”) in the United States District Court for the Southern District of New York alleging false advertising under the Lanham Act and unfair business practices in connection with Papaya’s marketing of its mobile games as “fair” and “skill-based” despite Papaya’s deployment of algorithmic competitors (“bots”) in its games that win cash prizes for Papaya’s benefit. In June 2024, the court denied Papaya’s motion to dismiss Skillz’s complaint in its entirety.
In September 2024, Papaya filed amended counterclaims against Skillz alleging that Skillz also engaged in false advertising and unfair business practices for purportedly allowing bots in games on Skillz’s platform, defamation for Skillz’s alleged involvement in a non-profit organization that collected and published data related to customer complaints to state attorney generals related to Papaya’s and other companies’ alleged fraudulent bot use, and purported trademark and copyright infringement of design elements of certain games, among other things.
In March 2025, the court dismissed Papaya’s defamation counterclaims and severed Papaya’s intellectual property claims. Following the court’s rulings, Papaya voluntarily dismissed its intellectual property claims against Skillz. On October 27, 2025, the court denied Papaya’s motion for summary judgment on Skillz’s claims. The court also denied Papaya’s motion to exclude Skillz’s damages and survey experts. On November 21, 2025, the court granted Skillz’s motion for summary judgment of all of
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
Papaya’s remaining counterclaims and affirmative defenses. On February 12, 2026, the court granted in part and denied in part Skillz’s motion to exclude Papaya’s damages and technical experts. The court also granted in part and denied in part Papaya’s motion to exclude Skillz’s technical expert.
On April 23, 2026, a jury in the U.S. District Court for the Southern District of New York found Papaya liable for false advertising and returned awards of $420 million in actual damages, $719 million in advisory profits-based disgorgement, and $652 million in advisory cost-savings disgorgement, with the court to determine which recovery theory will apply. Post-trial motions, oppositions, and replies were filed by the court’s June 19, 2026 deadline. The court issued an opinion and order awarding $719 million in disgorgement of unjust profits, plus approximately $10.1 million in fees and costs to Skillz on July 27, 2026. A final judgment in the matter was entered on July 31, 2026. The Company intends to vigorously pursue full collection of the judgment; however, no assurance can be given as to the timing or amount of any ultimate recovery, including in light of any appeal or further proceedings.
Mitchell, et al. v. Skillz Platform Inc.
On January 21, 2026, a putative class action was filed in the Northern District of California, Kel Mitchell et al., v. Skillz Platform Inc., Case No. 4:26-cv-00674-AMO. Plaintiffs individually and on behalf of all others similarly situated, alleges that Skillz violated California’s Unfair Competition Law, New York law for Deceptive Acts and Practices, Texas’s Deceptive Trade Practices Act, made negligent misrepresentations, and is liable for unjust enrichment. Plaintiffs’ claims arise out of allegations that Skillz purportedly made misrepresentations about not using bots in competitions on Skillz’s platform, misrepresented the evenness of Skillz’s matchmaking, and made misrepresentations about a user’s ability to withdraw cash. Plaintiffs seek declaratory relief that Skillz’s conduct violates applicable state law, compensatory and economic damages, damages for mental anguish, statutory, treble, and punitive damages, restitution of the money lost by the class, interest, costs, and attorneys’ fees, and injunctive relief. Plaintiff filed a First Amended Complaint on March 31, 2026. Skillz filed a motion to dismiss the First Amended Complaint on May 12, with the matter to be heard on August 6, 2026. Based on the information known by the Company, any such estimated loss is immaterial.
Indirect Taxes
The Company is subject to indirect taxes, including sales and use tax in the United States and value-added tax in certain foreign jurisdictions. The Company had indirect tax liabilities totaling $8.4 million and $12.6 million as of June 30, 2026 and December 31, 2025, 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. Indirect tax liabilities are adjusted considering changing facts and circumstances, such as the closing of a tax examination, further interpretation of existing tax law, or new tax law. The Company recognizes changes to estimates if they are estimable and probable that our positions would not be sustainable upon examination by tax authorities. Although management believes our recorded liabilities are reasonable, no assurance can be given that the final tax outcomes of these matters will not be different from those which our liabilities are based on. The Company’s application of the revenue code for indirect taxes in certain jurisdictions, including those within the United States, may be challenged by tax authorities in those jurisdictions. The Company is in the process of filing self-disclosure returns in unregistered jurisdictions. Any associated assessments may result in additional tax liabilities. The Company does not currently anticipate that any such assessments will result in a material increase in the liabilities.
The Company is currently undergoing an examination in the State of Washington regarding its indirect tax liability.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
9. Share Repurchase Program
On August 18, 2023, the Company’s Board of Directors (the “Board”) authorized a share repurchase program (the “Share Repurchase Program”) pursuant to which the Company was authorized to repurchase, at any time or from time to time, but for a period no longer than one year from the date of authorization, shares of the Company’s Class A common stock up to an aggregate purchase price of $65.0 million. Such purchases may be made on the New York Stock Exchange or any other national securities exchange on which the common stock is then traded. The Share Repurchase Program is pursuant to a plan pursuant to Rule 10b5-1 promulgated under the Exchange Act and/or pursuant to accelerated share repurchase arrangements, tender offers, privately negotiated transactions or otherwise. On December 5, 2024, the Board re-approved the Share Repurchase Program and extended the expiration date until otherwise suspended, terminated or modified at any time for any reason by the Board. The remaining availability under the Share Repurchase Program was $23.4 million as of June 30, 2026.
There were no 0.6 million and 1.4 million shares repurchased at a weighted average price of $5.08 and $5.39 per share for an aggregate value of $3.0 million and $7.7 million during the three and six months ended June 30, 2025, respectively.
10. Stock-Based Compensation
The following table summarizes stock-based compensation expense recognized for the three and six months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Cost of revenue | $ | $ | $ | $ | |||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
During the three and six months ended June 30, 2026, no immaterial amount and $0.1 million of stock-based compensation expense was capitalized as internally developed software and included in property and equipment, net, respectively.
Stock Options and Restricted Stock Units
Stock option and restricted stock activity during the six months ended June 30, 2026 is as follows (in thousands, except for share, per share, and contractual term data):
Options Outstanding | Restricted Stock Outstanding | ||||||||||||||||||||||||||||||||||
| Number of Shares Outstanding Under the Plan | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | Number of Plan Shares Outstanding | Weighted-Average Grant Date Fair Value per Share | ||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | |||||||||||||||||||||||||||||||||
| Granted | |||||||||||||||||||||||||||||||||||
Exercised or vested | ( | ( | |||||||||||||||||||||||||||||||||
Cancelled, forfeited or expired | ( | ( | |||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | |||||||||||||||||||||||||||||||||
During the three months ended June 30, 2026, the Compensation Committee of the Board (the “Compensation Committee”) approved performance stock unit awards to the Company's Chief Executive Officer under the Skillz Inc. 2020 Omnibus Incentive Plan, with the number of Performance Stock Units equal to $3.0 million divided by the 90 -calendar day volume-weighted average price (“VWAP”) for the Company’s Class A Common Stock as of the trading day prior to January 1, 2025 (the “Target Award”). From 0 % to a maximum of 200 % of the Target Award (the “Maximum Award”) may be earned based on
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
the achievement of stock price milestones. Each Performance Stock Unit is a notional amount that represents the right to receive one (1) share of Class A Common Stock of the Company (a “Share”), subject to the terms and conditions of the Skillz Inc. 2020 Omnibus Plan and applicable award agreement, if and when the Performance Stock Unit vests. The awards vest, if at all, in eight tranches upon the 30 -trading-day VWAP for the Class A Common Stock share price equaling or exceeding specified milestones ranging from $9.00 to $19.00 , subject to continued service and Compensation Committee certification.
During the three months ended June 30, 2026, the Compensation Committee also approved a long-term incentive award to the Company's Chief Executive Officer with (i) the number of Restricted Stock Units equal to $1.5 million divided by the 90 -calendar day volume-weighted average price for the Company’s Class A Common Stock as of the trading day prior to January 1, 2025 (the “90-day VWAP”) and (ii) the number of Performance Stock Units equal to $1.5 million divided by the 90 -day VWAP (collectively, the “Stock Units”). Each Stock Unit is a notional amount that represents the right to receive one (1) Share of Class A Common Stock of the Company, subject to the terms and conditions of the Omnibus Plan and this Agreement, if and when the Stock Unit vests. The Restricted Stock Units vest in twelve substantially equal quarterly installments measured from January 1, 2025. The Performance Stock Units are earned based on Net Gaming Revenue (50 % weighting) and Adjusted EBITDA (50 % weighting) measured against goals established by the Compensation Committee for each year of the performance periods ending December 31, 2026 and 2027, respectively, with payout ranging from 0 % to 200 % of target. In light of the performance goals being established separately for each year, each year's goals establish a separate grant date and measurement date for the related portion of the award.
11. Income Taxes
The Company’s provision for income taxes was $0.1 million for the three months ended June 30, 2026. The Company’s benefit from income taxes was an immaterial amount for the same period in the prior year. Our effective tax rate was negative 0.39 % for the three months ended June 30, 2026, as compared to 0.11 % for the same period in the prior year. The effective tax rates were less than the federal statutory rate of 21% primarily due to book losses, state and foreign taxes and equity award activities, mostly offset by a full valuation allowance on our deferred tax assets.
The Company’s provision for income taxes was $0.2 million for the six months ended June 30, 2026, and an immaterial amount for the same period in the prior year. Our effective tax rate was negative 0.48 % for the six months ended June 30, 2026, as compared to negative 0.06 % for the same period in the prior year. The effective tax rates were less than the federal statutory rate of 21% primarily due to book losses, state and foreign taxes and equity award activities, mostly offset by a full valuation allowance on our deferred tax assets.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
12. Segment Reporting
Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-making group (the “CODM”). Our CODM consists of the Chief Executive Officer who allocates resources and measures profitability based on our operating segments, which are managed and reviewed separately, as each represents products and services that can be sold separately to our customers. To monitor performance, the CODM regularly receives and reviews Adjusted EBITDA information for each operating segment, together with consolidated expense information. Additionally, the CODM receives estimated and forecasted expense information by operating segment. The CODM uses this information to monitor the operating efficiencies of segments and trends to monitor the overall health of each segment. The CODM evaluates operating performance and allocates resources based on Adjusted EBITDA. In particular, the CODM utilizes Adjusted EBITDA to evaluate total company performance and individual operating segment performance. In addition, the CODM utilizes Adjusted EBITDA in the evaluation of incentive compensation and the annual budget process. The CODM measures segment performance against annual budgets, forecasts and actual results. The CODM does not review information regarding total assets on a reportable segment basis.
We believe Adjusted EBITDA, a non-GAAP performance measure, is useful in evaluating the performance of its operating segments and is a similar measure reported by publicly-listed U.S. competitors, and regularly used by securities analysts, institutional investors, and other interested parties in analyzing operating performance and prospects. By providing this non-GAAP measure, the Company’s management intends to provide investors with a meaningful, consistent comparison of the Company’s profitability for the periods presented. As required by the rules of the SEC, the Company has provided herein a reconciliation of Adjusted EBITDA to the most directly comparable measures under GAAP. Adjusted EBITDA is not intended to be a substitute for any U.S. GAAP financial measures and, as calculated, may not be comparable to other similarly titled financial measures of other companies in other industries or within the same industry.
A description of the Company’s two reportable segments, as determined by our CODM, is as follows:
•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. The platform provides a managed backend that supports key competitive functionality, including player matching, leaderboards, anti-cheat integrity systems, and payment processing. Our scalable multi-player platform allows for real-world prizes that go beyond one-off competitive implementations and provides for a repeatable, developer-accessible system. 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.
•RZR: RZR is a performance marketing platform that enables advertisers to acquire, retain, and monetize users across mobile, connected television (CTV), and other digital channels. 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. While historically focused on mobile gaming, RZR now serves a broader set of industries, including consumer applications, retail, food and beverage, and entertainment.
Effective in the second quarter of 2026, the Company changed the composition of the information reviewed by the CODM to present unallocated corporate costs separately from the results of the Skillz reportable segment. The change reflects a change in the information regularly provided to and used by the CODM in assessing segment performance and allocating resources. Segment information for the prior-year periods presented has been recast to conform to the current period presentation. The change in segment presentation had no effect on the Company's condensed consolidated results of operations, financial condition or cash flows for any period presented.
The Company’s corporate operations primarily consist of executive, legal, finance and accounting, and support for our ongoing litigation matters, which are excluded from the results of our operating segments.
For the Skillz segment, end-user engagement marketing represents the cost of incentives provided to end users, such as Bonus Cash and Ticketz. Paid acquisition spend represents amounts paid to third parties to promote the Skillz platform. Headcount expenses include salaries, bonuses, contractors, travel, and burden such as employer taxes, benefits and insurance. Consulting fees represent expenses paid for professional fees. Vendor and software expenses represent fees paid for software and server costs and third-party technical support. Office and operations expenses represent rent and building maintenance. Other segment items include marketing expenses which, in turn, consists mostly of affiliate marketing and trade shows.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
For the RZR segment, operating expenses include all operating expenses such as headcount, marketing, software, professional fees such as legal and rent.
For both the Skillz and RZR segments, stock-based compensation expenses are not included in operating expenses.
The following tables provide summarized information about the Company’s operations by reportable segment and a reconciliation of Adjusted EBITDA to loss before income taxes for the three and six months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue | |||||||||||
| Skillz | $ | $ | |||||||||
| RZR | |||||||||||
Eliminations(1) | ( | ( | |||||||||
| Total Revenue | $ | $ | |||||||||
| Adjusted EBITDA | |||||||||||
| Skillz | $ | $ | ( | ||||||||
| RZR | ( | ||||||||||
Corporate(2) | ( | ( | |||||||||
| Total Adjusted EBITDA | $ | ( | $ | ( | |||||||
| Items to reconcile Adjusted EBITDA to net loss before income taxes: | |||||||||||
| Interest expense, net of interest income | $ | ( | $ | ( | |||||||
| Stock-based compensation | ( | ( | |||||||||
| Depreciation and amortization | ( | ( | |||||||||
| Other (expense) income, net | ( | ( | |||||||||
| Net loss before income taxes | $ | ( | $ | ( | |||||||
1.Amounts represent the RZR revenue earned from Skillz.
2.Amounts represent certain corporate executive, legal, finance and accounting, and litigation costs.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue | |||||||||||
| Skillz | $ | $ | |||||||||
| RZR | |||||||||||
Eliminations(1) | ( | ( | |||||||||
| Total Revenue | $ | $ | |||||||||
| Adjusted EBITDA | |||||||||||
| Skillz | $ | ( | $ | ( | |||||||
| RZR | ( | ||||||||||
Corporate(2) | ( | ( | |||||||||
| Total Adjusted EBITDA | $ | ( | $ | ( | |||||||
| Items to reconcile Adjusted EBITDA to net loss before income taxes: | |||||||||||
| Interest expense, net of interest income | $ | ( | $ | ( | |||||||
| Stock-based compensation | ( | ( | |||||||||
| Depreciation and amortization | ( | ( | |||||||||
Gain from litigation settlement(3) | |||||||||||
| Other (expense) income, net | ( | ( | |||||||||
| Net loss before income taxes | $ | ( | $ | ( | |||||||
1.Amounts represent the RZR revenue earned from Skillz.
2.Amounts represent certain corporate executive, legal, finance and accounting, and litigation costs.
3.Amounts represent a gain on a legal settlement recorded in connection with proceeds under terms of a settlement agreement entered into with AviaGames.
The following tables provide summarized information about the Company’s operations by reportable segment for the three and six months ended June 30, 2026 and 2025, respectively:
| Three Months Ended June 30, 2026 | |||||||||||
| Skillz | RZR | ||||||||||
| Revenue | $ | $ | |||||||||
| Less: | |||||||||||
| Cost of revenue | |||||||||||
| End-user engagement marketing | |||||||||||
| Paid acquisition spend | |||||||||||
| Headcount expenses | |||||||||||
| Consulting fees | |||||||||||
| Vendor and software expenses | |||||||||||
| Legal fees (non-litigation) | |||||||||||
| Litigation expense | |||||||||||
| Office and operations expense | |||||||||||
Other segment items(1) | |||||||||||
| Adjusted EBITDA | $ | $ | |||||||||
1.Other segment items for each segment are comprised of creative and live event marketing costs, employee event expenses and various miscellaneous expenses.
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FIRY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
| Three Months Ended June 30, 2025 | |||||||||||
| Skillz | RZR | ||||||||||
| Revenue | $ | $ | |||||||||
| Less: | |||||||||||
| Cost of revenue | |||||||||||
| End-user engagement marketing | |||||||||||
| Paid acquisition spend | |||||||||||
| Headcount expenses | |||||||||||
| Consulting fees | |||||||||||
| Vendor and software expenses | |||||||||||
| Legal fees (non-litigation) | |||||||||||
| Office and operations expense | |||||||||||
Other segment items(1) | |||||||||||
| Adjusted EBITDA | $ | ( | $ | ( | |||||||
1.Other segment items for each segment are comprised of creative and live event marketing costs, tax and license expenses, employee event expenses and various miscellaneous expenses.
| Six Months Ended June 30, 2026 | |||||||||||
| Skillz | RZR | ||||||||||
| Revenue | $ | $ | |||||||||
| Less: | |||||||||||
| Cost of revenue | |||||||||||
| End-user engagement marketing | |||||||||||
| Paid acquisition spend | |||||||||||
| Headcount expenses | |||||||||||
| Consulting fees | |||||||||||
| Vendor and software expenses | |||||||||||
| Legal fees (non-litigation) | |||||||||||
| Litigation expense | |||||||||||
| Office and operations expense | |||||||||||
Other segment items(1) | |||||||||||
| Adjusted EBITDA | $ | ( | $ | ||||||||
1.Other segment items for each segment are comprised of creative and live event marketing costs, employee event expenses and various miscellaneous expenses.
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FIRY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
| Six Months Ended June 30, 2025 | |||||||||||
| Skillz | RZR | ||||||||||
| Revenue | $ | $ | |||||||||
| Less: | |||||||||||
| Cost of revenue | |||||||||||
| End-user engagement marketing | |||||||||||
| Paid acquisition spend | |||||||||||
| Headcount expenses | |||||||||||
| Consulting fees | |||||||||||
| Vendor and software expenses | |||||||||||
| Legal fees (non-litigation) | |||||||||||
| Office and operations expense | |||||||||||
Other segment items(1) | |||||||||||
| Adjusted EBITDA | $ | ( | $ | ( | |||||||
1.Other segment items for each segment are comprised of creative and live event marketing costs, tax and license expenses, employee event expenses and various miscellaneous expenses.
Transactions Between Segments
Intercompany revenue was $0.1 million and $0.4 million for the three and six months ended June 30, 2026, respectively, and $0.1 million and $0.2 million for the three and six months ended June 30, 2025, respectively.
Capital Expenditures
Consolidated capital expenditures were $2.0 million and $3.4 million for the six months ended June 30, 2026 and 2025, respectively, which consisted primarily of costs related to internal-use software and costs to purchase property and equipment.
13. Loss Per Share
The Company computes loss per share of the Class A common stock and Class B common stock using the two-class method required for participating securities. Basic and diluted loss per share are the same for each class of common stock as they are entitled to the same liquidation and dividend rights. The effect of potentially dilutive common shares is reflected in diluted loss per share by application of the treasury stock method. There have been no material changes from the pertinent rights and privileges for participating securities previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
The following table sets forth the computation of basic and diluted loss per Class A common stock and Class B common stock (in thousands, except for share and per share data):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
Weighted average shares outstanding - basic and diluted | |||||||||||||||||||||||
| Loss per share, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
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FIRY INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in tables are in thousands, unless otherwise noted)
The following outstanding common stock equivalents were considered antidilutive, and therefore, excluded from the computation of diluted loss per share attributable to common stockholders for the periods presented (share numbers are not in thousands).
| As of June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Common stock warrants | |||||||||||
| Common stock options | |||||||||||
| Performance stock units | |||||||||||
| Restricted stock units | |||||||||||
| Total | |||||||||||
14. Subsequent Events
For purposes of the condensed consolidated financial statements as of June 30, 2026, the Company evaluated subsequent events for recognition and measurement purposes as of the filing date. The Company has concluded that no events or transactions have occurred that require disclosure except as follows:
Skillz v. Papaya Litigation
On July 27, 2026, a court issued an opinion and order awarding $719 million in disgorgement of unjust profits, plus approximately $10.1 million in fees and costs to the Company in respect of a false advertising lawsuit. A final judgment in the matter was entered on July 31, 2026. The Company intends to vigorously pursue full collection of the judgment; however, no assurance can be given as to the timing or amount of any ultimate recovery, including in light of any appeal or further proceedings. Refer to Note 8, “Commitments and Contingencies” for further discussion.
Partial Debt Redemption
On August 4, 2026, the Company delivered a notice of partial redemption of $80.0 million in aggregate principal amount of the Company’s outstanding 2021 Senior Secured Notes at a price of 100.00 % of the principal amount of the 2021 Senior Secured Notes, plus accrued and unpaid interest, with such redemption occurring on August 14, 2026. As of August 4, 2026, there was $129.7 million aggregate principal amount of the 2021 Senior Secured Notes outstanding. UMB Bank, N.A. is serving as the trustee for the 2021 Senior Secured Notes and as the paying agent for the Redemption.
On August 14, 2026, the Company redeemed $80.0 million in aggregate principal amount of the Company’s outstanding 2021 Senior Secured Notes at a redemption price of 100.00 % of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest. As of August 14, 2026, after consummation of that redemption, there was $49.7 million aggregate principal amount of the Senior Secured Notes outstanding.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Firy Inc. (for purposes of this section, “Firy,” “we,” “us” and “our”). MD&A is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report”), and our financial statements and the accompanying Notes to Financial Statements (Part I, Item 1 of this Form 10-Q).
This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about Firy and our industry that involve numerous risks and uncertainties, including, but not limited to, those described in Part I, Item 1A, “Risk Factors” in our Annual Report and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans, user growth and engagement, product initiatives, ability to collect legal judgments issued in our favor, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “going to,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. We caution you that the foregoing may not include all of the forward-looking statements made.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. Actual results may differ materially from those contained in any forward-looking statements. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. The inclusion of forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Forward-looking statements made speak only as of the date on which such statements are made, and we undertake no obligation to update them in light of new information or future events, except as required by law.
Overview
Firy Inc. (the “Company,” “Firy,” “we,” “us,” or “our”) is a global holding company and the parent of our operating businesses, including Skillz and RZR. Firy is built to fuel business potential and operates at the intersection of content, identity, commerce and performance marketing. The Company leverages first-party data, enterprise-scale infrastructure and scalable operating systems, with a disciplined focus on capital efficiency and long-term value creation.
Skillz operates a proprietary, online-hosted, multi-player platform that enables players worldwide to compete in games (“Competitions”). The platform hosts both games developed by third-party developers and games that Skillz itself owns and operates. Skillz provides third-party developers with a software development kit (“SDK”) that they download and integrate with their existing games. The SDK serves as a data interface between Skillz, developers and players that enables Skillz to provide monetization services, including end-user registration services, player matching, fraud and fair play monitoring, and billing and settlement services. In addition to enabling third-party developers, Skillz develops, publishes, and operates its own first-party games on the platform, which represents a meaningful portion of platform activity.
In March 2026, the Company’s Aarki business rebranded as RZR. The rebrand reflects expanded capabilities and market positioning; there was no change to the entity’s legal structure or control. RZR is an artificial-intelligence-powered demand-side platform that provides data-driven user acquisition, retargeting, and advertising optimization services across mobile and other digital channels. RZR applies proprietary machine learning models to improve advertising performance for its customers.
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 better outcomes for developers and greater efficiency for the Skillz 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 can only be used to enter into paid contests.
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User acquisition (“UA”) marketing is a sales and marketing expense to acquire new paying users to our platform. UA marketing spend for the six months ended June 30, 2026 was approximately $4.4 million, as compared to approximately $8.1 million in the six months ended June 30, 2025. We are currently unable to reasonably estimate the quantitative impact, or range of impact, that changes in UA marketing will have on forward-looking revenue as a result of a 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.
Developments
Tether Litigation
As previously disclosed, on August 29, 2025, we received a Notice from Tether indicating that Tether is terminating all of its various agreements with us, including our terms of service, effective as of September 1, 2025. Tether’s Notice provides that Tether is terminating the Tether Agreements for convenience, while also asserting grounds for termination for cause (effective September 28, 2025) in the event its termination for convenience is not held as effective by a competent tribunal. We believe the termination notice to be invalid and in breach of Tether’s obligations under the Tether Agreements.
Certain of the Tether Agreements restrict the removal of Tether’s top two games, Solitaire Cube and 21 Blitz, from the Company’s platform for at least 18 months following termination. During the post-termination period, Skillz has the option, but not the obligation, to host paid competitions for such games on the platform. 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. The Company is also disputing Tether’s allegations with respect to the grounds for termination of the Tether Agreements for cause. 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. 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.
Papaya Litigation
On April 23, 2026, a jury in the U.S. District Court for the Southern District of New York found Papaya Gaming Ltd. and Papaya Gaming Inc. (together, “Papaya”) liable for false advertising and returned awards of $420 million in actual damages, $719 million in profits-based disgorgement, and $652 million in advisory cost-savings disgorgement, with the court to determine which recovery theory will apply. Post-trial motions, oppositions, and replies were filed by the court’s June 19, 2026 deadline. The court issued an opinion and order awarding $719 million in disgorgement of unjust profits, plus approximately $10.1 million in fees and costs to Skillz on July 27, 2026. A final judgment in the matter was entered on July 31, 2026. The Company intends to vigorously pursue full collection of the judgment; however, no assurance can be given as to the timing or amount of any ultimate recovery, including in light of any appeal or further proceedings. Refer to Note 8, “Commitments and Contingencies” for further discussion.
Items Impacting Comparability of Results of Operations and Financial Condition
Our condensed consolidated financial statements included in this report reflect the following additional items impacting the comparability of results of operations and financial condition:
•In March 2025, the Company and a vendor settled a dispute. In exchange for mutual releases of all claims, the Company paid the vendor $2.8 million.
•In April 2025, the Company and a lessor of its former headquarters in San Francisco mutually agreed to terminate a lease. In exchange for mutual releases, the Company paid the lessor a lump sum payment of $14.0 million.
•In June 2025, the Company and a vendor settled a dispute. The Company paid the vendor $0.5 million, which represented the past due balances for year one and year two of the agreement.
•In April 2026, the Company completed an asset acquisition of a game tile for total consideration of $0.7 million, of which $0.4 million is payable within 12 months of the acquisition date.
•In May 2026, the Company completed an asset acquisition of a game tile for total consideration of $2.2 million, of which $0.2 million is payable within 12 months of the acquisition date.
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Operating Segments
We have two reportable business segments: Skillz and RZR. Refer to Note 12, “Segment Reporting”, of the notes to the condensed consolidated financial statements included in this Form 10-Q for further discussion.
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. The platform provides a managed backend that supports key competitive functionality, including player matching, leaderboards, anti-cheat integrity systems, and payment processing. Our scalable multi-player platform allows for real-world prizes that go beyond one-off competitive implementations and provides for a repeatable, developer-accessible system. 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.
•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.
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. 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.
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 relationship 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. For our developers, RZR enables monetization through user acquisition and re-targeting, and the more Skillz SDK-enabled developers use RZR, the better RZR’s machine learning engine becomes, which we believe drives improved outcomes for the developers and more spend on the RZR platform.
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Results of Operations
Comparison for the three months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | 2026 to 2025 Change | ||||||||||||||||||||||
| 2026 | 2025 | Increase/(Decrease) | |||||||||||||||||||||
| Amount | Percentage | ||||||||||||||||||||||
| Revenue | $ | 30,992 | $ | 25,214 | $ | 5,778 | 23 | % | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of revenue | 3,911 | 3,220 | 691 | 21 | % | ||||||||||||||||||
| Research and development | 6,888 | 4,840 | 2,048 | 42 | % | ||||||||||||||||||
| Sales and marketing | 13,592 | 16,431 | (2,839) | (17) | % | ||||||||||||||||||
| General and administrative | 28,168 | 16,706 | 11,462 | 69 | % | ||||||||||||||||||
| Total costs and expenses | 52,559 | 41,197 | 11,362 | 28 | % | ||||||||||||||||||
| Loss from operations | (21,567) | (15,983) | (5,584) | (35) | % | ||||||||||||||||||
| Interest expense, net of interest income | (2,424) | (1,321) | (1,103) | (83) | % | ||||||||||||||||||
| Other (expense) income, net | (388) | (637) | 249 | 39 | % | ||||||||||||||||||
| Loss before income taxes | (24,379) | (17,941) | (6,438) | (36) | % | ||||||||||||||||||
| Provision for (benefit from) income taxes | 96 | (19) | 115 | 605 | % | ||||||||||||||||||
| Net loss | $ | (24,475) | $ | (17,922) | $ | (6,553) | (37) | % | |||||||||||||||
Revenue
Total revenue increased by $5.8 million, or 23%, to $31.0 million for the three months ended June 30, 2026 from $25.2 million for the same period in the prior year. This was primarily due to higher revenue from our RZR segment, together with additional revenue from our Skillz segment.
RZR revenue increased by $4.4 million, or 75%, to $10.3 million for the three months ended June 30, 2026 from $5.9 million for the same period in the prior year. This was primarily due to higher advertising revenue from greater demand.
Skillz revenue increased by $1.4 million, or 7%, to $20.8 million for the three months ended June 30, 2026 from $19.4 million for the same period in the prior year. This was primarily due to higher average entry fees and a $3.7 million benefit recognized to reduce our indirect taxes liabilities, partially offset by reduced tournament play and higher end-user incentives.
Costs and Expenses
Cost of revenue increased by $0.7 million, or 21%, to $3.9 million for the three months ended June 30, 2026 from $3.2 million for the same period in the prior year. This was primarily due to higher software license, server and payment processing costs from our Skillz and RZR segments.
Research and development costs increased by $2.0 million, or 42%, to $6.9 million for the three months ended June 30, 2026 from $4.8 million for the same period in the prior year. This was primarily due to higher employee-related costs from our Skillz and RZR segments.
Sales and marketing costs decreased by $2.8 million, or 17%, to $13.6 million for the three months ended June 30, 2026 from $16.4 million for the same period in the prior year. This was primarily due to lower user acquisition marketing expenses and engagement marketing expenses from our Skillz segment, partially offset by higher employee-related costs from our Skillz and RZR segments.
General and administrative costs increased by $11.5 million, or 69%, to $28.2 million for the three months ended June 30, 2026 from $16.7 million for the same period in the prior year. This was primarily due to higher corporate legal fees in addition to higher corporate employee-related costs and employee-related costs from our RZR segment.
Interest expense, net of interest income increased by $1.1 million, or 83%, to $2.4 million for the three months ended June 30, 2026 from $1.3 million for the same period in the prior year. This was primarily related to lower interest income earned as the Company held fewer interest-bearing investments.
The provision for income taxes was $0.1 million for the three months ended June 30, 2026, representing a 605% increase when compared to the benefit from income taxes for the three months ended June 30, 2025. This was primarily due to a book loss, state and foreign taxes and equity award activities, mostly offset by a full valuation allowance on our deferred tax assets.
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Results of Operations
Comparison for the six months ended June 30, 2026 and 2025:
| Six Months Ended June 30, | 2026 to 2025 Change | ||||||||||||||||||||||
| 2026 | 2025 | Increase/(Decrease) | |||||||||||||||||||||
| Amount | Percentage | ||||||||||||||||||||||
| Revenue | $ | 60,097 | $ | 47,111 | $ | 12,986 | 28 | % | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of revenue | 7,508 | 6,184 | 1,324 | 21 | % | ||||||||||||||||||
| Research and development | 11,951 | 9,658 | 2,293 | 24 | % | ||||||||||||||||||
| Sales and marketing | 30,875 | 34,436 | (3,561) | (10) | % | ||||||||||||||||||
| General and administrative | 47,580 | 35,789 | 11,791 | 33 | % | ||||||||||||||||||
| Gain from litigation settlement | (7,500) | (7,500) | — | — | % | ||||||||||||||||||
| Total costs and expenses | 90,414 | 78,567 | 11,847 | 15 | % | ||||||||||||||||||
| Loss from operations | (30,317) | (31,456) | 1,139 | 4 | % | ||||||||||||||||||
| Interest expense, net of interest income | (4,704) | (2,392) | (2,312) | (97) | % | ||||||||||||||||||
| Other (expense) income, net | (229) | (1,196) | 967 | 81 | % | ||||||||||||||||||
| Loss before income taxes | (35,250) | (35,044) | (206) | (1) | % | ||||||||||||||||||
| Provision for income taxes | 170 | 20 | 150 | 750 | % | ||||||||||||||||||
| Net loss | $ | (35,420) | $ | (35,064) | $ | (356) | (1) | % | |||||||||||||||
Revenue
Total revenue increased by $13.0 million, or 28%, to $60.1 million for the six months ended June 30, 2026 from $47.1 million for the same period in the prior year. This was primarily due to higher revenue from our RZR segment, together with additional revenue from our Skillz segment.
RZR revenue increased by $9.8 million, or 94%, to $20.1 million for the six months ended June 30, 2026 from $10.4 million for the same period in the prior year. This was primarily due to higher advertising revenue from greater demand.
Skillz revenue increased by $3.4 million, or 9%, to $40.4 million for the six months ended June 30, 2026 from $37.0 million for the same period in the prior year. This was primarily due to higher average entry fees and reduced end-user incentives in addition to a $3.7 million benefit recognized to reduce our indirect taxes liabilities, partially offset by reduced tournament play.
Costs and Expenses
Cost of revenue increased by $1.3 million, or 21%, to $7.5 million for the six months ended June 30, 2026 from $6.2 million for the same period in the prior year. This was primarily due to higher software license, server and payment processing costs from our Skillz and RZR segments.
Research and development costs increased by $2.3 million, or 24%, to $12.0 million for the six months ended June 30, 2026 from $9.7 million for the same period in the prior year. This was primarily due to higher employee-related costs from our Skillz and RZR segments.
Sales and marketing costs decreased by $3.6 million, or 10%, to $30.9 million for the six months ended June 30, 2026 from $34.4 million for the same period in the prior year. This was primarily due to lower engagement and user acquisition marketing expenses from our Skillz segment, partially offset by higher employee-related costs from our Skillz and RZR segments.
General and administrative costs increased by $11.8 million, or 33%, to $47.6 million for the six months ended June 30, 2026 from $35.8 million for the same period in the prior year. This was primarily due to higher corporate legal fees in addition to higher corporate employee-related costs and employee-related costs from our RZR segment.
Interest expense, net of interest income increased by $2.3 million, or 97%, to $4.7 million for the six months ended June 30, 2026 from $2.4 million for the same period in the prior year. This was primarily related to lower interest income earned as the Company held fewer interest-bearing investments.
The provision for income taxes was $0.2 million for the six months ended June 30, 2026, representing a 750% increase when compared to the provision for income taxes for the six months ended June 30, 2025. This was primarily due to a book loss, state and foreign taxes and equity award activities, mostly offset by a full valuation allowance on our deferred tax assets.
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Liquidity and Capital Resources
As of June 30, 2026, our principal sources of liquidity are our cash and cash equivalents in the amount of $164.0 million, which are primarily invested in money market funds with maturities of less than three months.
In December 2021, the Company offered and sold $300.0 million in aggregate principal senior secured notes due 2026 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 will mature on December 15, 2026. 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. After giving effect to open market repurchases of our senior secured notes, $129.7 million of the senior secured notes remained outstanding as of June 30, 2026. We were in compliance with all covenants applicable to our secured notes as of June 30, 2026. On August 4, 2026, we delivered a notice of partial redemption to redeem $80.0 million in aggregate principal amount of the senior secured notes at a redemption price of 100.00% of the principal amount of the notes, plus accrued and unpaid interest, with such redemption occurring on August 14, 2026. On August 14, 2026, the Company redeemed $80.0 million in aggregate principal amount of the Company’s outstanding 2021 Senior Secured Notes at a redemption price of 100.00% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest. As of August 14, 2026, after consummation of that redemption, there was $49.7 million aggregate principal amount of the Senior Secured Notes outstanding.
We believe our existing sources of liquidity are sufficient to fund our operating activities on a short- and long-term basis. Our future cash requirements will depend on many factors, including revenue growth and additional sales and marketing spending activities in addition to funds needed to invest in or acquire complementary businesses, applications or technologies. However, we cannot assure you that cash provided by operating activities or cash and cash equivalents will be sufficient to meet our future needs. If we are unable to generate sufficient cash flows from operations in the future, we may have to obtain additional financing. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtain additional financing on favorable terms or at all.
The following table provides a summary of cash flow data:
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | Fav/(Unfav) $ Var | |||||||||||||||||||||
| Net cash used in operating activities | $ | (24,652) | $ | (31,741) | $ | 7,089 | |||||||||||||||||
| Net cash used in investing activities | $ | (4,212) | $ | (3,428) | $ | (784) | |||||||||||||||||
| Net cash used in financing activities | $ | (2,260) | $ | (8,097) | $ | 5,837 | |||||||||||||||||
Net Cash Used In Operating Activities
Our cash flows from operating activities are significantly affected by the growth of our businesses primarily related to research and development, sales and marketing, and general and administrative activities. 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 decreased by $7.1 million to $24.7 million for the six months ended June 30, 2026 from $31.7 million for the same period in the prior year. This was primarily due to changes in operating assets and liabilities related to cash receipts and disbursements in the normal course of business from our Skillz and RZR segments for the six months ended June 30, 2026.
Net Cash Used In Investing Activities
Net cash used in investing activities increased by $0.8 million to $4.2 million for the six months ended June 30, 2026 from $3.4 million for the same period in the prior year. This was primarily due to $2.2 million of asset acquisitions from our Skillz segment, partially offset by reduced equipment purchases from our Skillz and RZR segments.
Net Cash Used In Financing Activities
Net cash used in financing activities decreased by $5.8 million to $2.3 million for the six months ended June 30, 2026 from $8.1 million for the same period in the prior year. This was primarily due to $7.7 million of share repurchase activities that occurred during the prior year period, partially offset by $2.3 million of restricted stock vestings that occurred during the current year period.
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Contractual Obligations and Commitments
Our material cash requirements include the following contractual and other obligations.
Leases
We have operating lease arrangements for office space. As of June 30, 2026, we had lease payment obligations of $5.2 million, of which $1.3 million is payable within 12 months.
Long-Term Debt
The Company’s long-term debt consists of the 2021 Senior Secured Notes. As of June 30, 2026, the total principal amount of $129.7 million, gross of discount and issuance costs of $1.0 million, is due on December 15, 2026. On August 4, 2026, we delivered a notice of partial redemption to redeem $80.0 million in aggregate principal amount of the 2021 Senior Secured Notes at a redemption price of 100.00% of the principal amount of the 2021 Senior Secured Notes, plus accrued and unpaid interest, with such redemption occurring on August 14, 2026. On August 14, 2026, the Company redeemed $80.0 million in aggregate principal amount of the Company’s outstanding 2021 Senior Secured Notes at a redemption price of 100.00% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest. As of August 14, 2026, after consummation of that redemption, there was $49.7 million aggregate principal amount of the Senior Secured Notes outstanding.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical Accounting Policies and Estimates
There have been no material changes from the critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Recent Accounting Pronouncements
See Note 2, “Summary of Significant Accounting Policies”, to our condensed 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, the Company is not required to provide the information required by this Item.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2026, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures” means controls and other procedures of a company that are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission’s (“SEC”) rules and forms.
Based on the evaluation of our disclosure controls and procedures, our management has concluded that, as of June 30, 2026, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below.
Notwithstanding the material weaknesses, management has concluded that our condensed consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in this Form 10-Q, in conformity with GAAP.
Material Weaknesses
As previously disclosed in our management’s report on internal control over financial reporting within the Annual Report on Form 10-K for the year ended December 31, 2025, we identified material weaknesses in our internal control over financial reporting with respect to the following:
1.Risk assessment: The Company did not design an effective risk assessment process based on the criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO Framework”). As a result, the Company did not appropriately reassess and adequately design and implement controls over financial reporting, including with respect to identification and review of disclosures and monitoring controls, and with respect to providing the appropriate evidence of review of reconciliations, budgets, and key elements of the financial close process.
2.Information technology general controls (“ITGCs”): ITGCs in the areas of access and program change management over information technology (“IT”) systems that support the Company’s financial reporting processes were not designed or operating effectively. Specifically, the Company did not maintain sufficient: (a) user access controls to ensure appropriate segregation of duties and adequately restrict user and privileged access to financial applications, programs, and data to appropriate Company personnel; (b) program change management controls to ensure that IT program and data changes affecting financial information technology applications and underlying records are identified, tested, authorized, and implemented appropriately; and (c) program operations controls. As a result, the Company’s related IT dependent manual and application controls that rely upon the affected ITGCs, or information coming from IT systems with affected ITGCs were also deemed ineffective.
3.Internal control over financial reporting: Controls related to properly evaluating accounting processes were not adequately designed, implemented or operating effectively including the lack of sufficient documentation or evidence retained to demonstrate management’s review over several financial statement areas, as it relates to the Company’s reconciliations, budgets, and key elements of the financial reporting process. Additionally, there was an inadequate review of complex accounting assumptions, together with a lack of qualified accounting personnel employed during the year.
Material Weakness Remediation Efforts
Management, with oversight from the Audit Committee, will continue toward remediation of material weaknesses and reinforce the overall design and capability of our internal control environment. The following has been planned for implementation in management’s ongoing efforts to remediate the identified material weaknesses:
•Management will continue to enhance and standardize policies and procedures across the Company to ensure consistency and performance of internal controls;
•Management will continue to make strategic investments in qualified personnel, external consultants, and together with deploying available tools and systems to streamline and automate the execution and documentation of internal controls throughout the Company; and
•Management will continue to engage, educate and train personnel, including external consultants, throughout the Company on the importance of documenting and following internal controls.
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Changes in Internal Control over Financial Reporting
Other than noted above, there was no change in our internal control over financial reporting during the second quarter of 2026 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. An internal controls system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
In light of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to a simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate due to changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Refer to Note 8, “Commitments and Contingencies,” and Note 14, “Subsequent Events” in this Form 10-Q.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the fiscal quarter ended June 30, 2026, none of our directors or executive officers adopted terminated
ITEM 6. EXHIBITS
| Exhibit No. | Exhibit Description | Form | Exhibit | Filing Date | ||||||||||
| 3.1 | Fifth Amended and Restated Certificate of Incorporation | 8-K | 3.1 | 12/11/2024 | ||||||||||
| 3.2 | Certificate of Amendment to the Fifth Amended and Restated Certificate of Incorporation of Skillz Inc. | 8-K | 3.1 | 6/22/2026 | ||||||||||
| 3.3 | Amended and Restated Bylaws of Skillz Inc. | 8-K | 3.2 | 6/22/2026 | ||||||||||
| 4.1 | Form of Specimen Class A Common Stock Certificate of Skillz Inc. | 8-K | 4.1 | 12/21/2020 | ||||||||||
| 4.2 | Indenture, dated as of December 20, 2021, among Skillz Inc., each of the guarantors party thereto and UMB Bank, N.A., as Trustee | 8-K | 4.1 | 12/20/2021 | ||||||||||
| 4.3 | First Supplemental Indenture, dated April 13, 2023, by and among Skillz Inc. the guarantors party thereto and UMB Bank, N.A., as trustee and collateral agent | 8-K | 4.1 | 4/14/2023 | ||||||||||
| 4.4 | Form of 10.250% Note due 2026 (included as Exhibit A to Exhibit 4.4) | 8-K | 4.2 | 12/20/2021 | ||||||||||
| 10.1 | Offer Letter, dated May 17, 2026, between Skillz Inc. and Robert Alex Walsh | 8-K | 10.1 | 5/20/2026 | ||||||||||
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||||||
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||||||
32.1# | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||||||
32.2# | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||
| 101.DEF* | Inline XBRL Definition Linkbase Document | |||||||||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||||||||
*Filed herewith.
# Furnished, not filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| FIRY INC. | ||||||||
| By: | /s/ Todd A. Valli | |||||||
Date: August 19, 2026 | Name: | Todd A. Valli | ||||||
| Title: | Chief Accounting Officer and Duly Authorized Officer | |||||||
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