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    SKLZ
    Earnings call· Jun 2026(Q2 FY26)

    Skillz Q2 FY26 earnings call SKLZ

    Aug 14, 2026 Source

    Executive summary

    Firy Q2 FY26 — Strong RZR Growth, Papaya Judgment Win, and Skillz Turnaround Plan

    Firy Inc. reported a pivotal Q2 FY26, marked by a significant rebrand and a substantial $730 million judgment in the Papaya litigation. The RZR segment demonstrated strong growth and profitability, while the Skillz segment faced operational headwinds, prompting a strategic turnaround plan. The company is actively managing its capital structure, including a debt redemption, and is focused on leveraging its interconnected businesses for long-term value creation.

    Highlights

    5

    • GAAP revenue increased 23% year-over-year to $31 million.

    • Adjusted EBITDA loss (excluding litigation-related expenses) improved by $4.5 million quarter-over-quarter to $2.7 million.

    • RZR segment revenue exceeded $10 million for the first time, growing 75% year-over-year and achieving its fourth consecutive quarter of profitability.

    • Redeemed $80 million in debt, saving approximately $2.8 million in interest expense and leaving $50 million outstanding.

    • Awarded approximately $730 million in the Papaya litigation, more than 70% above the original jury award.

    Concerns

    3

    • Skillz revenue declined approximately 3% sequentially, consistent with an 8% decline in paying monthly active users.

    • Q2 litigation costs were elevated at nearly $11 million due to the Papaya trial.

    • Net loss of $24.5 million compared to $17.9 million in Q2 2025.

    Guidance & targets

    3
    CategoryTargetConfidence
    RZR revenue growth
    nearly double year-over-year
    high materiality
    High
    Operating cash flow
    modest positive
    high materiality
    High
    Skillz sequential growth
    sequential growth
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    RZR
    Exceeded $10 million in quarterly revenue for the first time, growing 6% QoQ and 75% YoY. Achieved fourth consecutive quarter of profitability, expected to build through H2. Diversifying advertiser base beyond gaming into consumer apps, retail, and entertainment. Owns and operates data servers for efficient retargeting and user acquisition.
    Gaming as % of Q2 revenue: 70% (down from 80% in prior quarter)
    		$10 million75%6%profitable
    Skillz
    Experienced operational headwinds. Revenue declined approximately 3% sequentially, consistent with an 8% decline in paying MAU, excluding a $1.5 million one-time benefit. CEO Andrew Paradise is leading the business on an interim basis, with a line of sight to sequential growth in Q4. Content is a balance of owned/operated, second-party, and third-party titles.
    Paying monthly active users (MAU) decline: 8% sequentiallyGames owned and operated as % of Q2 GMV: 40%
    		modestly increased quarter-over-quarter———

    Operational metrics

    18
    Adjusted EBITDA loss (excluding litigation-related expenses)
    $2.7 million$4.5 million improvement quarter-over-quarter
    Q2 FY26
    Adjusted EBITDA loss (including litigation-related expenses)
    $13.6 millioncompared to a loss of $12.8 million in Q1 of '26 and a loss of $11.4 million in Q2 of '25
    Q2 FY26
    Interest expense savings from debt redemption
    $2.8 million
    annual
    Cash and cash equivalents
    $164 million
    Q2 FY26
    Debt outstanding
    $130 million
    Q2 FY26
    Debt outstanding after redemption
    $50 million
    post-redemption
    Federal net operating loss carryforwards
    $702 million
    as of Dec 31, 2025
    State net operating loss carryforwards
    $280 million
    as of Dec 31, 2025
    AviaGames settlement remaining
    $15 million
    future
    Minimum cash balance for operations
    $30 million
    ongoing
    Litigation costs
    nearly $11 million
    Q2 FY26

    Elevated due to Papaya trial, expected to decrease in future periods.

    R&D expenses
    $6.9 millionup from $5.1 million sequentially and up 42% year-over-year
    Q2 FY26
    General and administrative expenses
    $28.2 millionincreased 69% year-over-year
    Q2 FY26
    RZR queries processed
    6 million
    current
    RZR devices processed
    10 billion
    current
    Skillz games owned and operated
    40%
    Q2 FY26
    Sales and marketing spend
    $13.6 milliondown from $17.3 million in Q1
    Q2 FY26
    End user incentives (per paying monthly active user)
    $19down from $21
    Q2 FY26

    Industry KPIs

    2
    MetricValueDetails
    Paid members subscribers8% decline%
    Share buyback capital returned—

    Product announcements

    2
    ProductTypeDetails
    Firy Rebrandlaunch
    RZR CTV productlaunch

    Deals & partnerships

    5
    Papaya GamingCourt judgment for false advertising$730 million

    Presiding judge rejected Papaya's post-trial challenges and awarded Firy approximately $730 million, more than 70% above the original jury award. Firy intends to assert its rights as Papaya's largest creditor.

    AviaGamesSettlement from litigation$80 million

    The 2024 jury verdict translated into an $80 million settlement, with $15 million remaining outstanding in two equal payments over the next two years.

    VoodooOngoing litigation

    Litigation against Voodoo continues to move forward in the legal process.

    Tether StudiosOngoing litigation

    The trial date in litigation with Tether Studios has been moved to 2027.

    LGExclusive gaming advertiser partnership for CTV

    RZR has an exclusive gaming advertiser partnership with LG for its Connected Television (CTV) product.

    Risks & headwinds

    4
    Skillz operational headwinds and sequential revenue declineQ2 FY26

    Skillz revenue down approximately 3% sequentially, 8% decline in paying monthly active users.

    Mitigation: CEO Andrew Paradise leading interim, focus on product/content improvements, disciplined unit economics, customer lifetime value, line of sight to sequential growth in Q4.

    Elevated litigation costsQ2 FY26

    Nearly $11 million in Q2 FY26.

    Mitigation: Expected to decrease in future periods; belief in strong ROI from litigation.

    Uncertainty of Papaya judgment collectionOngoing

    $730 million awarded.

    Mitigation: Confident in the record and judgment, pursuing every avenue available for collection, asserting rights in Israeli and U.S. proceedings.

    Mobile game advertising market choppinessPast 5 years, ongoing

    New device slowdown over the last 5 years.

    Mitigation: Market seeking equilibrium, mobile advertising is here to stay, diversification into e-commerce, healthcare, AI.

    What to watch in Q3 FY26

    5

    Skillz sequential growth

    Q4
    Currentdown approximately 3% sequentially
    Targetsequential growth

    Why it matters

    Indicates the effectiveness of the turnaround strategy for the Skillz segment.

    We have line of sight to return the business to sequential growth in Q4.

    Q&A highlights

    6

    Why rebrand to Firy now, and what market conditions support this change?

    The rebrand clarifies that Skillz has evolved into multiple businesses, with RZR being a significant revenue and profitability driver. It helps investors understand the diversified business lines (RZR, Skillz, Beamable) which all serve game developers and operate a 'compounding flywheel'.

    “So the concept of -- it's more than just a rebrand, it's really to help all of the investors listening and those who can't be here today to understand that we've moved from one business line, skill-based gaming platform with Skillz to actually having multiple business lines, with RZR being a significant portion of our revenue currently.”

    asked by Edward Alter · answered by Andrew Paradise

    2 min read6 chapters

    Detailed Narrative

    01

    Firy Rebrand and Holding Company Structure

    The company rebranded to Firy in June, establishing a holding company structure with RZR (AI-powered performance advertising), Skillz (real money skill-based gaming), and Beamable (developer back-end) as operating segments. This rebrand aims to clarify the diversified business lines and their interconnected 'compounding flywheel' for investors. Corporate operating expenses are now reported separately for cleaner segment views, a presentation change with no impact on consolidated financials.

    02

    Papaya Litigation Victory and Collection Efforts

    Firy secured a judgment of approximately $730 million against Papaya Gaming for false advertising, significantly exceeding the original jury award and double the previous largest false advertising award in U.S. history. The company is confident in the judgment and is pursuing all avenues for collection, asserting its rights as Papaya's largest creditor in both Israeli and U.S. proceedings, recognizing that no appellate outcome is guaranteed. Papaya's 2023 financials showed $461 million in revenue, $73 million in net income, and $135 million in cash.

    03

    RZR Segment Outperformance and Diversification

    RZR achieved its first quarter with over $10 million in revenue, growing 75% year-over-year and marking its fourth consecutive quarter of profitability. The segment is diversifying its advertiser base beyond gaming (now 70% of Q2 revenue, down from 80%) into consumer apps, retail, and entertainment. RZR processes over 6 million queries per second across 10 billion devices, leveraging owned data servers for efficient retargeting and user acquisition. The iOS products and newly launched CTV offering have significant untapped potential, with revenue expected to nearly double year-over-year for FY26.

    04

    Skillz Turnaround Strategy and Operational Headwinds

    The Skillz business experienced operational headwinds in Q2, with revenue down 3% sequentially and paying monthly active users declining 8%, excluding a $1.5 million one-time📎 benefit. CEO Andrew Paradise is leading the segment on an interim basis, focusing on product and content improvements, disciplined unit economics, and customer lifetime value. The company has a line of sight to sequential growth in Q4, prioritizing product and content fixes before accelerating user acquisition spend.

    05

    Strengthening Capital Structure and Liquidity

    Firy announced the redemption of $80 million in debt, reducing outstanding debt to $50 million (maturing December 15) and saving $2.8 million in annual interest expense. The company ended Q2 with $164 million in cash and cash equivalents and is evaluating alternatives to further strengthen its capital structure and liquidity position, including potential refinancing. Management highlighted unrecognized assets on the balance sheet, including $702 million in federal NOLs, $280 million in state NOLs, $15 million remaining from the AviaGames settlement, and a 10% preferred stake in Exit Games.

    06

    New CFO Appointment and Strategic Vision

    Alex Walsh joined as the new CFO on July 13, bringing extensive experience from Aristocrat Gaming, The LEGO Group, and Procter & Gamble. His appointment is expected to support top-line growth and profitability as the company transitions into a growth phase. Management reiterated a 100-year vision for the company, emphasizing the improving business economics and the new structure designed to compound value across its businesses.

    AI-generated summary of the company’s earnings call. Not investment advice.