Papaya verdict and segment growth shape Skillz (NYSE: SKLZ) Q1 2026 results

Rhea-AI Filing Summary

Skillz Inc. reported first‑quarter 2026 revenue of $29.1 million, up 33% from $21.9 million a year earlier, while narrowing its net loss to $10.9 million from $17.1 million. Growth was driven mainly by the RZR advertising segment, whose revenue more than doubled to $9.8 million, alongside a 12% increase in Skillz platform revenue to $19.7 million.

Cost discipline was mixed: sales and marketing expense fell slightly, but general and administrative and interest expense rose, and total operating costs stayed roughly flat at $37.9 million. Cash and cash equivalents were $185.4 million as of March 31, 2026, against $129.7 million of senior secured notes due in 2026.

The company continues to record a $7.5 million quarterly gain from its AviaGames litigation settlement. Separately, a jury found Papaya Gaming liable for false advertising and issued damages figures ranging from $420 million to $719 million, with the court to select the applicable remedy. Management also reports ongoing material weaknesses in internal control over financial reporting.

Positive

• Jury verdict against Papaya with large damages figures: A U.S. jury found Papaya Gaming liable for false advertising and issued damages figures of $420 million (actual), $719 million (profits-based disgorgement), or $652 million (cost-savings disgorgement), with the court to decide the applicable theory in June 2026.

Negative

• None.

Insights

Equity & credit analyst

Revenue is accelerating and losses are shrinking, but control issues and legal outcomes remain key uncertainties.

Skillz delivered stronger top-line momentum in Q1 2026, with revenue up 33% to $29.1 million and net loss improving to $10.9 million. The RZR ad-tech segment more than doubled revenue to $9.8 million, while the core Skillz platform grew to $19.7 million.

Operating efficiency is improving but not yet sufficient for profitability. Total costs and expenses held nearly flat at $37.9 million, helped by lower user acquisition and engagement marketing, yet interest expense rose as net interest swung to a $2.3 million cost due to lower investment income.

Liquidity appears solid with $185.4 million of cash and equivalents and $129.7 million of senior secured notes maturing in 2026, but refinancing or repayment remains a medium-term task. The continuing AviaGames settlement gains support earnings quality, while the Papaya jury verdict introduces potentially large upside whose final amount the court expects to determine in June 2026. Persistent material weaknesses in internal controls and multiple ongoing lawsuits introduce governance and execution risk despite the improving operating trend.

Key Figures

Revenue: $29.1 million Net loss: $10.9 million Skillz segment revenue: $19.7 million +5 more

8 metrics

Revenue $29.1 million Three months ended March 31, 2026; up from $21.9 million in 2025

Net loss $10.9 million Three months ended March 31, 2026; improved from $17.1 million

Skillz segment revenue $19.7 million Three months ended March 31, 2026

RZR segment revenue $9.8 million Three months ended March 31, 2026; up from $4.4 million

Cash and cash equivalents $185.4 million Balance as of March 31, 2026

Senior secured notes outstanding $129.7 million 2021 Senior Secured Notes principal as of March 31, 2026

AviaGames settlement gain $7.5 million Gain recognized in Q1 2026 from annual royalty payment

Papaya jury actual damages $420 million Jury award for false advertising; court to select damages theory

Key Terms

adjusted EBITDA, 10.25% secured notes, non-marketable equity securities, material weaknesses in internal control over financial reporting, +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.

10.25% secured notes financial

"the Company issued $300 million of 10.25% secured notes in a private placement"

non-marketable equity securities financial

"Non-marketable equity securities are investments in privately held companies without readily determinable fair values."

material weaknesses in internal control over financial reporting regulatory

"we identified material weaknesses in our internal control over financial reporting with respect to the following"

A material weakness in internal control over financial reporting is a significant flaw in a company’s processes that increases the likelihood its financial statements could be wrong or misleading. Think of it as a broken checkpoint in an airport security line: if it fails, errors or fraud can pass through undetected. Investors care because these weaknesses raise the risk that reported earnings, assets, or liabilities are inaccurate, which can affect valuation, trust, and investment decisions.

false advertising regulatory

"found Papaya liable for false advertising and ordered Papaya to pay an actual damages award"

performance marketing platform financial

"RZR is a performance marketing platform that enables advertisers to acquire, retain, and monetize users"

10-Q Quarterly Reports: What Changes Quarter to Quarter →

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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 March 31, 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

SKILLZ INC.

(Exact name of registrant as specified in its charter)

Delaware

84-4478274

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

6625 Badura Ave Las Vegas, Nevada

89118

(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
Class A common stock, par value $0.0001 per share			SKLZ			New York Stock Exchange

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			☐
Non-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 May 8, 2026, the registrant had outstanding 12,177,494 shares of Class A common stock and 3,430,063 shares of Class B common stock.

TABLE OF CONTENTS

SKILLZ 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			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			28
Item 4. Controls and Procedures			29
PART II - OTHER INFORMATION
Item 1. Legal Proceedings			31
Item 1A. Risk Factors			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			31
Item 3. Defaults Upon Senior Securities			31
Item 4. Mine Safety Disclosures			31
Item 5. Other Information			31
Item 6. Exhibits			31
Signatures			32

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SKILLZ INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except for number of shares and par value per share amounts)

			March 31,						December 31,
			2026						2025
Assets
Current assets:
Cash and cash equivalents			$	185,401					$	194,513
Accounts receivable, net of allowance for credit losses of $257 as of March 31, 2026 and December 31, 2025			16,062						14,412
Prepaid expenses and other current assets			7,639						7,553
Total current assets			209,102						216,478
Non-current assets:
Property and equipment, net			20,979						20,776
Operating lease right-of-use assets, net			917						1,082
Non-marketable equity securities			52,768						52,768
Restricted cash, non-current			1,000						1,000
Other non-current assets			2,582						1,351
Total non-current assets			78,246						76,977
Total assets			$	287,348					$	293,455
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable			$	8,609					$	9,713
Operating lease liabilities, current			417						465
Current portion of long-term debt			128,110						127,589
Other current liabilities			47,192						42,944
Total current liabilities			184,328						180,711
Non-current liabilities:
Operating lease liabilities, non-current			547						665
Other non-current liabilities			260						259
Total non-current liabilities			807						924
Total liabilities			185,135						181,635
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock $0.0001 par value; 10.0 million shares authorized — no shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively			—						—
Common stock $0.0001 par value; 31.3 million shares authorized; Class A common stock – 25.0 million shares authorized; 19.5 million and 19.3 million shares issued; 12.4 million and 12.2 million outstanding as of March 31, 2026 and December 31, 2025, respectively; Class B common stock – 6.3 million shares authorized; 3.4 million shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively			1						1
Additional paid-in capital			1,247,726						1,245,462
Accumulated other comprehensive loss			(1,297)						(371)
Accumulated deficit			(1,102,611)						(1,091,666)
Treasury stock at cost, 7.1 million and 7.1 million shares as of March 31, 2026 and December 31, 2025, respectively			(41,606)						(41,606)
Total stockholders’ equity			102,213						111,820
Total liabilities and stockholders’ equity			$	287,348					$	293,455

See accompanying Notes to the Condensed Consolidated Financial Statements.

1

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SKILLZ INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited, in thousands, except for number of shares and per share amounts)

			Three Months Ended March 31,
			2026						2025
Revenue			$	29,105					$	21,897
Costs and expenses:
Cost of revenue			3,597						2,965
Research and development			5,063						4,817
Sales and marketing			17,283						18,005
General and administrative			19,412						19,083
Gain from litigation settlement			(7,500)						(7,500)
Total costs and expenses			37,855						37,370
Loss from operations			(8,750)						(15,473)
Interest expense, net of interest income			(2,280)						(1,071)
Other income (expense), net			159						(559)
Loss before income taxes			(10,871)						(17,103)
Provision for income taxes			74						39
Net loss			$	(10,945)					$	(17,142)
Loss per share attributable to common stockholders:
Basic			$	(0.69)					$	(1.05)
Diluted			$	(0.69)					$	(1.05)
Weighted average shares outstanding:
Basic			15,832,060						16,289,299
Diluted			15,832,060						16,289,299
Other comprehensive loss:
Foreign currency translation loss			(926)						—
Total other comprehensive loss			(926)						—
Total comprehensive loss			$	(11,871)					$	(17,142)

See accompanying Notes to the Condensed Consolidated Financial Statements.

2

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SKILLZ 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						Accumulated deficit						Treasury Stock												Total stockholders’ equity
															Shares									Amount																					Shares									Amount
Balance at January 1, 2026															15,629,912						$	1					$	1,245,462					$	(371)					$	(1,091,666)					7,114,485						$	(41,606)					$	111,820
Net loss															—						—						—						—						(10,945)						—						—						(10,945)
Stock-based compensation															—						—						2,749						—						—						—						—						2,749
Restricted stock vesting, net of shares withheld															235,611						—						(485)						—						—						—						—						(485)
Foreign currency translation															—						—						—						(926)						—						—						—						(926)
Balance at March 31, 2026															15,865,523						$	1					$	1,247,726					$	(1,297)					$	(1,102,611)					7,114,485						(41,606)						$	102,213
Balance at January 1, 2025															16,736,904						$	1					$	1,226,642					$	—					$	(1,021,258)					5,416,418						$	(32,349)					$	173,036
Net loss															—						—						—						—						(17,142)						—						—						(17,142)
Stock-based compensation															—						—						5,646						—						—						—						—						5,646
Shares repurchased															(845,564)						—						—						—						—						845,564						(4,732)						(4,732)
Balance at March 31, 2025															15,891,340						$	1					$	1,232,288					$	—					$	(1,038,400)					6,261,982						$	(37,081)					$	156,808

See accompanying Notes to the Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

						Three Months Ended March 31,
						2026						2025
Operating Activities
Net loss						$	(10,945)					$	(17,142)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization						716						167
Stock-based compensation						2,757						5,550
Accretion of unamortized debt discount and amortization of debt issuance costs						521						462
Non-cash lease expense						123						42
Recoveries of bad debt						—						(16)
Changes in operating assets and liabilities:
Accounts receivable, net						(1,651)						(3,219)
Prepaid expenses and other assets						(1,318)						1,235
Accounts payable						(1,058)						(736)
Operating lease liabilities						(124)						(42)
Other accruals and liabilities						4,243						2,768
Net cash used in operating activities						(6,736)						(10,931)
Investing Activities
Purchases of property and equipment						(363)						(1,192)
Capitalization of software development costs						(602)						(535)
Net cash used in investing activities						(965)						(1,727)
Financing Activities
Principal payments on finance leases obligations						—						(192)
Repurchase of common stock						—						(4,732)
Restricted stock vesting, net of shares withheld						(485)						—
Net cash used in financing activities						(485)						(4,924)
Effect of exchange rates on cash and cash equivalents						(926)						—
Net change in cash, cash equivalents and restricted cash						(9,112)						(17,582)
Cash, cash equivalents and restricted cash – beginning of year						195,513						281,923
Cash, cash equivalents and restricted cash – end of period						$	186,401					$	264,341
Supplemental cash disclosures
Cash paid for interest						$	—					$	11
Cash paid for taxes, net of refunds received						$	11					$	34
Supplemental non-cash disclosures
Purchases of property and equipment included in accounts payable						$	12					$	67
Stock-based compensation capitalized in software development costs						$	—					$	96

See accompanying Notes to the Condensed Consolidated Financial Statements.

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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

Skillz (the “Company” or “Skillz”) operates a proprietary, online-hosted, multi-player platform that creates a system inside of game developer’s games (“Competitions”) to players worldwide. 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. Specifically, these monetization services include end-user registration services, player matching, fraud and fair play monitoring, and billing and settlement services.

In March 2026, the Company’s business Aarki 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 a performance marketing platform that provides data-driven user acquisition, retargeting, and advertising optimization services across mobile and other digital channels, including connected television.

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 months ended March 31, 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 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.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

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 sheet that sum to the total of the same such amount shown on the condensed consolidated statements of cash flows for the three months ended March 31, 2026:

			March 31,						December 31,
			2026						2025
Cash, cash equivalents and restricted cash
Cash			$	25,472					$	10,101
Money market funds			159,929						184,412
Restricted cash - non-current			1,000						1,000
Total cash, cash equivalents and restricted cash			$	186,401					$	195,513

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, represents 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.

The activity in our allowance for credit losses for the three months ended March 31, 2026 and 2025 is as follows:

			2026						2025
Beginning balance for credit losses			$	257					$	273
Provision for bad debt			—						—
Recoveries			—						(16)
Ending balance for credit losses			$	257					$	257

Four customers of RZR accounted for approximately 45% of the accounts receivable balance as of March 31, 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.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

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 million as of March 31, 2026 and December 31, 2025, respectively, and are classified as non-marketable equity securities on the condensed consolidated balance sheets.

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 months ended March 31, 2026 and 2025, respectively.

Investment Components

Investments consisted of the following as of March 31, 2026 and December 31, 2025:

						As of March 31, 2026
						Adjusted Cost Basis						Unrealized Gains						Unrealized Losses						Fair Value						Cash and Cash Equivalents						Marketable Securities - Current						Marketable Securities - Non-current
Money market funds						$	159,929					$	—					$	—					$	159,929					$	159,929					$	—					$	—
Total investments						$	159,929					$	—					$	—					$	159,929					$	159,929					$	—					$	—

						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						$	184,412					$	—					$	—					$	184,412					$	184,412					$	—					$	—
Total investments						$	184,412					$	—					$	—					$	184,412					$	184,412					$	—					$	—

Advertising and Promotional Expense

Advertising and promotional expenses are included in sales and marketing expenses within the condensed consolidated statements of operations and comprehensive loss and are expensed when incurred. Advertising expenses, excluding marketing promotions related to the Company’s end-user incentive programs, were $3.6 million and $5.0 million for the three months ended March 31, 2026 and 2025, respectively.

User Acquisition

User acquisition (“UA”) marketing costs to acquire new paying users to the platform are included in sales and marketing expenses in the consolidated statements of operations and comprehensive loss. UA marketing costs were $3.2 million and $4.6 million for the three months ended March 31, 2026 and 2025, respectively.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

Interest Expense, Net of Interest Income

Interest expense, net of interest income, consisted of the following for the three months ended March 31, 2026 and 2025:

			Three Months Ended March 31,
			2026						2025
Interest expense, net of interest income
Interest expense			$	(3,844)					$	(3,796)
Interest income			1,564						2,725
Total interest expense, net of interest income			$	(2,280)					$	(1,071)

Indirect Tax Liabilities

The Company is subject to indirect taxes such as sales and use tax in the United States and value-added tax in certain foreign jurisdictions, respectively. 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 its estimate if it is estimable and probable that its position would not be sustainable upon examination by taxing authorities. Although management believes the Company’s recorded liabilities are reasonable, no assurance can be given that the final tax outcomes of these matters will not be different from those which its liabilities are based on. To the extent that final tax outcomes of these matters are different than the amounts recorded, such differences could have a material impact on the Company’s condensed consolidated financial statements as the Company records related tax reserves as a reduction in revenue, and penalties and interest in general and administrative expenses. Indirect tax liabilities, recorded in other current liabilities, totaled $12.4 million and $12.6 million at March 31, 2026 and December 31, 2025, respectively. See Note 8, “Commitments and Contingencies” for additional information.

401(k) Plan

The Company has a 401(k) Plan that qualifies as a deferred salary arrangement under Section 401 of the Internal Revenue Code. Under the 401(k) Plan, participating employees may defer a portion of their pretax earnings and receive a matching employer contribution of up to 3% of compensation not to exceed the maximum amount allowable. For the three months ended March 31, 2026 and 2025, respectively, the Company recognized an expense under this plan of $0.1 million and $0.1 million, respectively.

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 introducing 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.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

3. Revenue

The following tables present the Company’s revenues, disaggregated by offering, geographical region, and reportable segment for the three months ended March 31, 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 March 31, 2026
			Skillz						RZR						Total
Revenue From Customers:
Entry Fee Revenue			$	19,387					$	—					$	19,387
Advertising Revenue			—						9,756						9,756
Other Revenue:
Maintenance Fee Revenue			269						—						269
Total Revenue			$	19,656					$	9,756					$	29,412
United States			$	18,459					$	2,264					$	20,723
Other Countries			1,197						7,492						8,689
Total Revenue			$	19,656					$	9,756					$	29,412
Elimination(1)															(307)
Consolidated															$	29,105

1.Elimination of RZR intercompany revenues, which were generated within the United States.

			Three Months Ended March 31, 2025
			Skillz						RZR						Total
Revenue From Customers:
Entry Fee Revenue			$	17,151					$	—					$	17,151
Advertising Revenue			—						4,439						4,439
Other Revenue:
Maintenance Fee Revenue			441						—						441
Total Revenue			$	17,592					$	4,439					$	22,031
United States			$	16,298					$	1,319					$	17,617
Other Countries			1,294						3,120						4,414
Total Revenue			$	17,592					$	4,439					$	22,031
Elimination(1)															(134)
Consolidated															$	21,897

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)

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. 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.

Games provided by two developer partners accounted for 70% of the Company’s consolidated revenue for three months ended March 31, 2026, with each developer partner accounting for at least 10% of the total.

Games provided by three developer partners accounted for 71% of the Company’s consolidated revenue for three months ended March 31, 2025, 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 of $1.1 million and $2.8 million related to these end-user incentives for the three months ended March 31, 2026 and 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 of $7.6 million and $9.0 million related to end-user incentives for the three months ended March 31, 2026 and 2025, respectively.

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 in either of three months ended March 31, 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.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

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 Company is a party to various non-cancelable finance lease agreements for certain network equipment. The leases have original lease periods expiring between 2026 to 2028. 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.

The components of lease costs, lease term and the discount rate were as follows for the three months ended March 31, 2026 and 2025, respectively:

			Three Months Ended March 31,
			2026						2025
Finance leases
Amortization of assets under finance leases			$	—					$	—
Interest			—						11
Total finance lease costs			$	—					$	11
Operating lease cost			$	157					$	351
Variable lease cost			$	23					$	100
Short-term lease rent expense			$	736					$	707
Weighted-average remaining lease term
Operating leases			1.5						4.5
Finance leases			0.0						0.1
			Three Months Ended March 31,
			2026						2025
Weighted-average discount rate
Operating leases			7.4		%				10.2		%
Finance leases			—		%				2.8		%

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

Supplemental cash flow information related to leases for the three months ended March 31, 2026 and 2025, respectively:

			Three Months Ended March 31,
			2026						2025
Cash paid for amounts included in the measurement of lease liabilities:
Payments for operating leases included in cash from operating activities			$	155					$	50
Payments for finance leases included in cash from operating activities			$	—					$	11
Payments for finance leases included in cash from financing activities			$	—					$	192
Assets obtained in exchange for lease obligations:
Operating leases			$	—					$	—
Finance leases			$	—					$	—

The following table outlines future minimum lease payments under the Company’s non-cancellable leases as of March 31, 2026:

			Operating Leases
2026			$	408
2027			451
2028			272
Total undiscounted cash flows			1,131
Less: Imputed interest			(167)
Present value of lease liabilities			$	964
Lease liabilities, current			$	417
Lease liabilities, non-current			547
Present value of lease liabilities			$	964

As of March 31, 2026, the Company does not have any operating and/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 March 31, 2026 and December 31, 2025:

			March 31,						December 31,
			2026						2025
Credit card processing reserve			$	1,000					$	1,000
Prepaid expenses			5,095						5,423
Other current assets			1,544						1,130
Prepaid expenses and other current assets			$	7,639					$	7,553

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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 March 31, 2026 and December 31, 2025:

			March 31,						December 31,
			2026						2025
Land			$	980					$	980
Building			12,838						12,831
Capitalized internal-use software			13,911						13,459
Computer equipment and servers			3,987						3,202
Furniture and fixtures			378						378
Leasehold improvements			122						122
Construction in progress			1,903						2,246
Total property and equipment			34,119						33,218
Accumulated depreciation and amortization			(13,140)						(12,442)
Property and equipment, net			$	20,979					$	20,776

Property and equipment, net by geography was as follows:

			March 31,						December 31,
			2026						2025
United States			$	20,534					$	20,350
Other countries			445						426
Total			$	20,979					$	20,776

Other Current Liabilities

Other current liabilities consisted of the following as of March 31, 2026 and December 31, 2025:

			March 31,						December 31,
			2026						2025
Indirect tax liabilities			$	12,378					$	12,635
End-user liability, net			8,604						8,177
Accrued publisher fees			6,191						6,367
Accrued compensation			5,695						4,475
Accrued operating expenses			3,469						5,787
Accrued interest expenses			3,877						554
Accrued legal expenses			4,835						2,422
Accrued sales and marketing expenses			701						1,084
Accrued developer revenue share			872						912
Short-term lease obligations			2						2
Other			568						529
Other current liabilities			$	47,192					$	42,944

6. Fair Value Measurements

As of March 31, 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.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

Assets measured at fair value on a recurring basis consisted of the following as of March 31, 2026 and December 31, 2025:

						Fair Value Measurements as of March 31, 2026
						Level 1						Level 2						Level 3						Total
Assets:
Cash equivalents:
Money market funds						$	159,929					$	—					$	—					$	159,929
Total assets						$	159,929					$	—					$	—					$	159,929

						Fair Value Measurements as of December 31, 2025
						Level 1						Level 2						Level 3						Total
Assets:
Cash equivalents:
Money market funds						$	184,412					$	—					$	—					$	184,412
Total assets						$	184,412					$	—					$	—					$	184,412

7. Long-Term Debt

Long-term debt consisted of the following as of March 31, 2026 and December 31, 2025:

			March 31,						December 31,
			2026						2025
2021 Senior Secured Notes			$	129,671					$	129,671
Unamortized discount and issuance costs			(1,561)						(2,082)
Total debt after discount and issuance costs			128,110						127,589
Current portion of long-term debt			(128,110)						(127,589)
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 March 31, 2026 and December 31, 2025, respectively.

Voluntary prepayments are permitted in whole, or in part, in minimum amounts as set forth in the Indenture Agreement 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 $0.5 million for the three months ended March 31, 2026 and 2025, respectively.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

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 March 31, 2026 based on secondary market quotes.

The following table outlines maturities of the principal related to the Company’s long-term debt as of March 31, 2026:

						Amount
Maturities of borrowings
2026						$	129,671
Total						$	129,671

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 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 million when payment was received. The Company expects to record the $7.5 million payments to be received in March 2027 and 2028 as a gain upon receipt of each amount.

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 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.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

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 case is currently scheduled for trial on August 25-27, 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. Plaintiff has issued certain subpoenas following this ruling, and certain non-parties have produced documents in response to those subpoenas. Further briefing in support of summary judgment on demand futility grounds is expected, but no schedule is currently in place for such briefing. Based on the information known by the Company, any such estimated loss range is not possible to determine.

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. 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.

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

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

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 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 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 ordered Papaya to pay an actual damages award of $420 million or advisory profits-based disgorgement of $719 million or cost-savings disgorgement of $652 million. The court is set to issue a decision in June 2026 with respect to which theory to accept.

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. 3:26-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 July 20, 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-add tax in certain foreign jurisdictions. The Company had indirect tax liabilities totaling $12.4 million and $12.6 million as of March 31, 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 taxing 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 taxing 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 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 March 31, 2026.

There were no shares repurchased during the three months ended March 31, 2026. During the three months ended March 31, 2025, the Company repurchased 0.8 million shares at a weighted average price of $5.60 per share for an aggregate value of $4.7 million under the Share Repurchase Program.

10. Stock-Based Compensation

The following table summarizes stock-based compensation expense recognized for the three months ended March 31, 2026 and 2025:

			Three Months Ended March 31,
			2026						2025
Cost of revenue			$	—					$	3
Research and development			138						249
Sales and marketing			361						1,183
General and administrative			2,258						4,115
Total stock-based compensation expense			$	2,757					$	5,550

For the three months ended March 31, 2026, an immaterial amount of stock-based compensation expense was capitalized as internally developed software and included in property and equipment, net. For the three months ended March 31, 2025, $0.1 million of stock-based compensation expense was capitalized as internally developed software.

Stock Options and Restricted Stock Units

Stock option and RSU activity during the three months ended March 31, 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			676,704						$	314.72					4.96						9						1,310,546						$	10.51
Granted			—						—																		—						—
Exercised or vested			—						—																		(321,047)						4.30
Cancelled, forfeited or expired			—						—																		(30,394)						6.08
Balance at March 31, 2026			676,704						$	314.72					4.71						—						959,105						$	12.73

11. Income Taxes

The Company’s provision for income taxes was $0.1 million for the three months ended March 31, 2026, and an immaterial amount for the same period in the prior year. Our effective tax rate was negative 0.68% for the three months ended March 31, 2026, as compared to negative 0.23% 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.

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.

The Company’s corporate operations primarily support Skillz and are included in the results for the Skillz segment. Likewise, RZR largely has its own corporate operations, which are included in the RZR segment.

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/Software expenses represent fees paid for the Company’s annual audit and tax advisors, software and server costs and third-party technical support. Legal fees (non-litigation) represent certain expenses that relate to contract negotiations, securities law, compliance and lawsuits in the normal course of business. Litigation expenses include fees incurred by the Company pursuing damages against certain named defendants for unfair business practices and their use of ‘bots’ (see Note 8 “Commitments and Contingencies”). Office and operations expenses represent rent and building maintenance. Other segment items include marketing expenses which, in turn, consists mostly of affiliate marketing, state and corporate fees, fines and penalties and trade shows.

For the RZR Segment, operating expenses include all operating expenses such as headcount, marketing, software, professional fees such as legal, audit and tax compliance and rent.

For both the Skillz and RZR segments, stock-based compensation expenses are not included in operating expenses.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

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 months ended March 31, 2026 and 2025:

			Three Months Ended March 31,
			2026						2025
Revenue
Skillz			$	19,656					$	17,592
RZR			9,756						4,439
Eliminations(1)			(307)						(134)
Total Revenue			$	29,105					$	21,897
Adjusted EBITDA
Skillz			$	(14,821)					$	(16,283)
RZR			2,044						(973)
Total adjusted EBITDA			$	(12,777)					$	(17,256)
Items to reconcile adjusted EBITDA to net loss before income taxes:
Interest expense, net of interest income			$	(2,280)					$	(1,071)
Stock-based compensation			(2,757)						(5,550)
Depreciation and amortization			(716)						(167)
Gain from litigation settlement(2)			7,500						7,500
Other income (expense), net			159						(559)
Net loss before income taxes			$	(10,871)					$	(17,103)

1.Amounts represent the RZR revenue earned from Skillz.

2.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 months ended March 31, 2026 and 2025, respectively:

			Three Months Ended March 31, 2026
			Skillz						RZR
Revenue			$	19,656					$	9,756
Less:
Cost of revenue			2,411						1,046
End user engagement marketing			7,920
Paid acquisition spend			2,908
Headcount expenses			7,092						5,190
Consulting fees			3,196						134
Vendor and software expenses			1,459						240
Legal fees (non-litigation)			805						140
Litigation expense			5,633
Office and operations expense			1,544						334
Other segment items			1,509						628
Adjusted EBITDA			$	(14,821)					$	2,044

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in tables are in thousands, unless otherwise noted)

			Three Months Ended March 31, 2025
			Skillz						RZR
Revenue			$	17,592					$	4,439
Less:
Cost of revenue			1,840						976
End user engagement marketing			8,280
Paid acquisition spend			3,731
Headcount expenses			7,015						3,431
Consulting fees			1,143						153
Vendor and software expenses			3,698
Legal fees (non-litigation)			526						82
Litigation expense			5,655
Office and operations expense			1,626						306
Other segment items			361						464
Adjusted EBITDA			$	(16,283)					$	(973)

Transactions Between Segments

Intercompany revenue was $0.3 million and $0.1 million for the three months ended March 31, 2026 and 2025, respectively.

Capital Expenditures

Consolidated capital expenditures were $1.0 million and $1.7 million for the three months ended March 31, 2026 and 2025, respectively, which consisted primarily of costs related to internal-use software and costs to purchase property and equipment, respectively.

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.

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 March 31,
			2026						2025
Numerator:
Net loss			$	(10,945)					$	(17,142)
Denominator:
Weighted average shares outstanding - basic and diluted			15,832,060						16,289,299
Loss per share, basic and diluted			$	(0.69)					$	(1.05)

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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 March 31,
			2026						2025
Common stock warrants			—						226,786
Common stock options			676,704						681,729
Performance stock units			241,538						27,075
Restricted stock units			959,105						2,007,112
Total			1,877,347						2,942,702

14. Subsequent Events

For purposes of the condensed consolidated financial statements as of March 31, 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 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 ordered Papaya to pay an actual damages award of $420 million or advisory profits-based disgorgements of $719 million or cost-savings disgorgement of $652 million. The court is set to issue a decision in June 2026 with respect to which theory to accept. Refer to Note 8, “Commitments and Contingencies” for further discussion.

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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 Skillz Inc. (for purposes of this section, “Skillz,” “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 Skillz 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, including statements regarding our future results of operations or financial condition, business strategy and plans, user growth and engagement, product initiatives, 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

We were founded on one simple belief: competition holds the power to unleash possibilities in all of us. We are all born with skills and when we are able to apply those skills through competition, we can achieve great things. That is the guiding principle behind why we are advancing competitive mobile gaming.

Our Company’s mission is to bring out the best in everyone through competition. We believe our business model is unique in that we create both opportunities for game developers to turn their craft into financial success and opportunities for players to experience wins through our platform.

Our proprietary multi-player platform, a form of social media solution, provides interactive entertainment through competitive game content. We believe our platform democratizes the mobile gaming industry by “leveling the playing field” for developers worldwide, enabling us to deliver gaming experiences that our player community can trust. The trust and fairness we foster with our player community is part of the foundation upon which our business is built.

In March 2026, Aarki, our performance marketing platform business, rebranded as “RZR.” The rebrand reflects an evolution of the platform’s capabilities and market positioning and does not represent a change in ownership or legal structure.

Paired with RZR (formerly Aarki), our AI-powered advertising technology segment, Skillz operates an ecosystem that combines content, audience, and performance into a unified growth engine. RZR delivers advertising solutions that drive revenue growth for brands and mobile apps by leveraging billions of contextual bidding signals, proprietary machine learning, and behavioral models to engage audiences in a privacy-first world. We are increasingly focused on expanding into emerging performance channels such as connected television, as well as enhancing cross-channel measurement and optimization capabilities. 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.

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Trends and Developments Impacting our Business

Trends

Engagement marketing is a sales and marketing expense representing rewards and awards that developers do not have a valid expectation of being offered to end-users to engage on our platform. Engagement marketing may be impacted by end-user incentives, which include Bonus Cash that could only be used to enter into paid contests.

User acquisition (“UA”) marketing is a sales and marketing expense to acquire new paying users to our platform. UA marketing spend for the three months ended March 31, 2026 was approximately $3.2 million, as compared to approximately $4.6 million in the three months ended March 31, 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 the number of interrelated factors impacting revenue, including, but not limited to, retention of existing users on the platform, average revenue per paying monthly active user, efficacy of various marketing programs on existing users, elasticity of the digital advertising supply curve, and impact of varying levels of player liquidity on the existing user ecosystem.

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 or services, 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. See the risk factor entitled “Historically, a limited number of games have accounted for a substantial portion of our revenue. If these games were to become less popular or be removed from our platform and we are unable to identify and market suitable replacements, our business and prospects could suffer” in Part I, Item 1A, Risk Factors of this Annual Report for additional information on risks related to Tether’s Notice. 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 ordered Papaya to pay $420 million in damages. The jury also issued advisory figures of $719 million in profits-based disgorgement and $652 million in cost-savings disgorgement. The court is set to issue a decision in June 2026 with respect to which theory to accept. 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 that was fully accrued as of December 31, 2024. Refer to Note 8, “Commitments and Contingencies,” of the notes to the condensed consolidated financial statements included in this Form 10-Q for more information.

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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 March 31, 2026 and 2025:

			Three Months Ended March 31,												2026 to 2025 Change
			2026						2025						Increase/(Decrease)
															Amount						Percentage
Revenue			$	29,105					$	21,897					$	7,208					33		%
Costs and expenses:
Cost of revenue			3,597						2,965						632						21		%
Research and development			5,063						4,817						246						5		%
Sales and marketing			17,283						18,005						(722)						(4)		%
General and administrative			19,412						19,083						329						2		%
Gain from litigation settlement			(7,500)						(7,500)						—						—		%
Total costs and expenses			37,855						37,370						485						1		%
Loss from operations			(8,750)						(15,473)						6,723						43		%
Interest expense, net of interest income			(2,280)						(1,071)						(1,209)						(113)		%
Other income (expense), net			159						(559)						718						128		%
Loss before income taxes			(10,871)						(17,103)						6,232						36		%
Provision for income taxes			74						39						35						90		%
Net loss			$	(10,945)					$	(17,142)					$	6,197					36		%

Revenue

Total revenue increased by $7.2 million, or 33%, to $29.1 million for the three months ended March 31, 2026 from $21.9 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 $5.3 million, or 120%, to $9.8 million for the three months ended March 31, 2026 from $4.4 million for the same period in the prior year. This was primarily due to higher advertising revenue from greater demand.

Skillz revenue increased by $2.0 million, or 12%, to $19.7 million for the three months ended March 31, 2026 from $17.6 million for the same period in the prior year. This was primarily due to higher average entry fees, partially offset by reduced tournament play.

Costs and Expenses

Cost of revenue increased by $0.6 million, or 21%, to $3.6 million for the three months ended March 31, 2026 from $3.0 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 segment.

Research and development costs increased by $0.2 million, or 5%, to $5.1 million for the three months ended March 31, 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 $0.7 million, or 4%, to $17.3 million for the three months ended March 31, 2026 from $18.0 million for the same period in the prior year. This was primarily due to lower engagement and user acquisition marketing expenses, partially offset by higher employee related costs from our Skillz segment. The overall decrease was partially offset by higher employee related costs from our RZR segment.

General and administrative costs increased by $0.3 million, or 2%, to $19.4 million for the three months ended March 31, 2026 from $19.1 million for the same period in the prior year. This was primarily due to higher software license costs and legal fees, partially offset by lower employee related costs from our Skillz segment. This increase was also attributed to higher employee related costs from our RZR segment.

Interest expense, net of interest income increased by $1.2 million, or 113%, to $2.3 million for the three months ended March 31, 2026 from $1.1 million for the same period in the prior year. This was primarily related to lower interest income earned as the Company held less interest bearing investments.

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The provision for income taxes was $0.1 million for the three months ended March 31, 2026, representing a 90% increase when compared to the provision for income taxes for the three months ended March 31, 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.

Liquidity and Capital Resources

As of March 31, 2026, our principal sources of liquidity are our cash and cash equivalents in the amount of $185.4 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 March 31, 2026. We were in compliance with all covenants applicable to our secured notes as of March 31, 2026.

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:

						Three Months Ended March 31,
												2026						2025			Fav/(Unfav) $ Var
Net cash used in operating activities												$	(6,736)					$	(10,931)		$	4,195
Net cash used in investing activities												$	(965)					$	(1,727)		$	762
Net cash used in financing activities												$	(485)					$	(4,924)		$	4,439

Net Cash Used In Operating Activities

Our cash flows from operating activities are significantly affected by the growth of our business primarily related to research and development, sales and marketing, and general and administrative activities. 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 $4.2 million to $6.7 million for the three months ended March 31, 2026 from $10.9 million for the same period in the prior year. This was primarily due to a lower net loss in addition 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 three months ended March 31, 2026.

Net Cash Used In Investing Activities

Net cash used in investing activities decreased by $0.8 million to $1.0 million for the three months ended March 31, 2026 from $1.7 million for the same period in the prior year. This was primarily due to $0.6 million of capitalized software development costs and $0.4 million for purchases of property and equipment from our Skillz and RZR segments.

Net Cash Used In Financing Activities

Net cash used in financing activities decreased by $4.4 million to $0.5 million for three months ended March 31, 2026 from $4.9 million for the same period in the prior year. This was primarily due to share repurchase activities that occurred during the prior year period.

Contractual Obligations and Commitments

Our material cash requirements include the following contractual and other obligations.

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Leases

We have operating lease arrangements for office space. As of March 31, 2026, we had lease payment obligations of $1.1 million, of which $0.5 million is payable within 12 months.

Long-Term Debt

The Company’s long-term debt consists of the 2021 Senior Secured Notes. As of March 31, 2026, the total principal amount of $129.7 million, gross of discount and issuance costs of $1.6 million, is due on December 15, 2026.

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 March 31, 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 March 31, 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 first quarter of 2026 that materially affected, or are 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 March 31, 2026, none of our directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

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

Amended and Restated Bylaws of Skillz Inc.

8-K

3.2

12/21/2020

4.1

Form of Specimen Class A Common Stock Certificate of Skillz Inc.

8-K

4.1

12/21/2020

4.2*

Description of Skillz Inc.’s Securities

4.3

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

4.4

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

4.5

Form of 10.250% Note due 2026 (included as Exhibit A to Exhibit 4.4)

8-K

4.2

12/20/2021

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.

			SKILLZ INC.
			By:			/s/ Todd A. Valli
Date: May 15, 2026			Name:			Todd A. Valli
			Title:			Chief Accounting Officer and Duly Authorized Officer

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FAQ

How did Skillz (SKLZ) perform financially in Q1 2026?

Skillz generated $29.1 million in revenue in Q1 2026, up 33% year over year, and reduced its net loss to $10.9 million from $17.1 million. Total costs stayed about flat, so higher revenue directly improved operating results despite ongoing losses.

What drove Skillz and RZR segment revenue in Q1 2026?

The Skillz segment produced $19.7 million in revenue, mainly from higher average entry fees, partly offset by reduced tournament play. RZR, the advertising platform, delivered $9.8 million, more than doubling year over year due to greater advertising demand across its performance marketing offerings.

What is Skillz’s cash position and debt as of March 31, 2026?

Skillz held $185.4 million of cash and cash equivalents plus $1.0 million of restricted cash as of March 31, 2026. The company has $129.7 million of 10.25% senior secured notes outstanding, maturing on December 15, 2026, and reports compliance with note covenants.

What is the status of Skillz’s litigation with Papaya Gaming?

In April 2026, a jury found Papaya Gaming liable for false advertising and set damages at $420 million, with advisory disgorgement figures of $719 million and $652 million. The court plans to decide in June 2026 which damages theory to accept, which will determine the final award.

How is Skillz accounting for the AviaGames litigation settlement?

Under the AviaGames settlement, Skillz receives $7.5 million annually from 2025 through 2028 as royalties on a patent license. It records a $7.5 million gain from the settlement when each payment is received; one such gain was recognized in Q1 2026, matching the prior-year quarter.

Does Skillz still report material weaknesses in internal controls?

Yes. Management concluded disclosure controls were not effective as of March 31, 2026, citing material weaknesses in risk assessment, IT general controls, and financial reporting processes. These issues affect design and documentation of controls and are being addressed through ongoing remediation efforts.