8-K: Skillz Reports Q3 2025 Preliminary Results Amid Filing Delays

Skillz Inc. announced preliminary Q3 2025 financial results, showing revenue growth and improved Adjusted EBITDA loss, but also disclosed ongoing delays in filing prior reports and an NYSE extension for compliance.

Summary

• Preliminary Q3 2025 revenue was $27.4 million, reflecting an 11% year-over-year and 9% sequential quarterly growth.
• Gross profit for the quarter reached $24.0 million.
• The company reported a net loss of $17.4 million for Q3 2025.
• Adjusted EBITDA loss improved to $11.8 million in Q3 2025, compared to a loss of $13.9 million in Q3 2024.
• Paying Monthly Active Users (PMAU) grew to 155,000, an increase of 6% quarter-over-quarter and 28% year-over-year.
• Average Revenue Per Paying Monthly Active User (ARPPU) was $58.9 for the quarter.
• Total costs and expenses, excluding cost of revenue, amounted to $40.3 million.
• Cash and restricted cash stood at $213 million as of September 30, 2025.
• The company is still in the process of completing financial statements for the fiscal year ended December 31, 2024, and for the first and second quarters of 2025.
• Skillz may file an extension for its Q3 2025 Quarterly Report on Form 10-Q.
• The New York Stock Exchange (NYSE) granted an extension until December 17, 2025, for the company to become current with its SEC filings, following a notice of non-compliance.
• Adjustments were made to preliminary Q2 2025 results, including a $2.2 million reduction in revenues and an $8.0 million increase in general and administrative expenses, collectively increasing the net loss for that quarter by $9.1 million.

Sentiment

Score: 3

Explanation: While there are some positive operational metrics like revenue growth and improved Adjusted EBITDA loss, these are severely overshadowed by persistent and significant financial reporting delays, NYSE non-compliance, and the disclosure of material weaknesses in internal controls. The adjustments to prior preliminary results further erode confidence in financial accuracy. The overall situation points to significant operational and governance challenges.

Positives

• Revenue of $27.4 million for Q3 2025, representing 11% year-over-year and 9% sequential quarterly growth.
• Adjusted EBITDA loss improved to $11.8 million in Q3 2025, a positive comparison to a loss of $13.9 million in Q3 2024.
• Paying Monthly Active Users (PMAU) increased to 155,000, up 6% quarter-over-quarter and 28% year-over-year, reflecting stronger engagement and monetization.
• Cash and restricted cash balance of $213 million as of September 30, 2025, provides capital for strategic initiatives.
• Paying MAU to MAU ratio improved to 25% in Q3 2025 from 14% in Q3 2024.
• Average Revenue Per Monthly Active User (ARPU) increased to $14.9 in Q3 2025 from $9.7 in Q3 2024.
• Reduction in sales and marketing expenses to $17.368 million in Q3 2025 from $19.294 million in Q3 2024.

Negatives

• Net loss of $17.4 million for Q3 2025.
• Gross Marketplace Volume (GMV) decreased to $139.451 million in Q3 2025 from $158.238 million in Q3 2024.
• Average Revenue Per Paying Monthly Active User (ARPPU) decreased to $58.9 in Q3 2025 from $67.6 in Q3 2024.
• Monthly Active Users (MAUs) decreased to 613,000 in Q3 2025 from 845,000 in Q3 2024.
• Significant cash burn, with cash and restricted cash decreasing from $281.923 million at the beginning of the year to $212.801 million by September 30, 2025.
• Ongoing delays in filing the Annual Report on Form 10-K for FY2024 and Quarterly Reports on Form 10-Q for Q1 2025 and Q2 2025.
• Received a notice from the NYSE regarding non-compliance with listing standards due to delayed filings.
• Required to present a compliance plan to the NYSE and was granted an extension until December 17, 2025, to become current with SEC filings.
• Adjustments to preliminary Q2 2025 results included a $2.2 million reduction in revenue and an $8.0 million increase in general and administrative expenses, leading to a $9.1 million increase in net loss for that quarter.
• Material weaknesses in internal controls over financial reporting not fully remediated during 2025.

Risks

• Ability to effectively compete in the global entertainment and gaming industries.
• Ability to attract and retain successful relationships with the third-party developers who develop and update the games hosted on the platform.
• Ability to drive brand awareness with end-users.
• Ability to invest in growth and development of employees.
• Ability to mitigate commercial, reputational, and regulatory risks.
• Resolution of ongoing litigation with Voodoo SAS, Papaya Gaming, and other litigation matters, including the suit filed against Tether Studios, LLC and Tether Games, Inc.
• Remediation during 2025 of certain not-fully remediated material weaknesses in internal controls over financial reporting.
• Compliance with evolving laws and regulations, including the applicable provisions of the recently passed One Big Beautiful Bill Act, as well as expectations applicable to its business, including with respect to cybersecurity, artificial intelligence, and corporate governance matters.
• Timely filing of periodic reports with the SEC.
• Potential changes to preliminary results that could occur as internal review and independent registered public accounting firm review and audit (as applicable) of such results are finalized.

Future Outlook

The company aims for consistent top-line growth and positive Adjusted EBITDA. It plans to invest in strategic initiatives and deliver long-term shareholder value through disciplined execution, leveraging its strengths in gaming and AI-driven ad-tech to extend into adjacent verticals where performance marketing and content converge.

Management Comments

• "Skillz's third quarter results reflect continued progress toward our goal of delivering consistent top-line growth and positive Adjusted EBITDA." Andrew Paradise, Chief Executive Officer.
• "This quarter, we delivered 11% year-over-year and 9% sequential quarterly revenue growth as well as 28% year-over-year growth in paying monthly active users reflecting stronger engagement and monetization across our platform." Andrew Paradise, Chief Executive Officer.
• "With continued execution in the quarter from our platform business and accelerating growth from our ad tech engine, Aarki, we are encouraged by the progress across both of our businesses." Andrew Paradise, Chief Executive Officer.
• "By combining our strengths in gaming and AI-driven ad-tech, we are building a powerful foundation that can extend beyond gaming into adjacent verticals where performance marketing and content converge." Andrew Paradise, Chief Executive Officer.
• "Our focus on expense management and operational efficiency continues to drive improvement in Adjusted EBITDA and maintain a healthy balance sheet." Gaetano Franceschi, Chief Financial Officer.
• "With $213 million in cash, we're well positioned to invest in strategic initiatives and deliver long-term shareholder value through disciplined execution." Gaetano Franceschi, Chief Financial Officer.

Industry Context

The mobile gaming and ad-tech industries are highly competitive and dynamic. Skillz's strategy to combine gaming and AI-driven ad-tech (Aarki) suggests an attempt to diversify revenue streams and leverage technological synergies, potentially expanding beyond core gaming into broader performance marketing and content verticals. The growth in PMAU and ARPU, alongside a decline in overall MAU and GMV, indicates a focus on monetizing a smaller, more engaged user base, a trend seen in parts of the mobile gaming sector. The ongoing financial reporting issues, however, significantly detract from any positive operational performance, raising concerns about corporate governance and internal controls, which are critical in any industry.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results for direct benchmarking.
• The reported revenue growth of 11% year-over-year and 9% quarter-over-quarter is positive, but needs to be assessed against industry averages for mobile gaming platforms, which can vary widely based on market segment and growth stage.
• The improvement in Adjusted EBITDA loss is a positive sign of cost management and operational efficiency, but the company remains unprofitable with a net loss of $17.4 million.
• The 28% year-over-year growth in Paying Monthly Active Users (PMAU) is strong, indicating effective monetization of a segment of its user base. However, the decline in overall Monthly Active Users (MAU) and Gross Marketplace Volume (GMV) suggests challenges in broader user acquisition or retention.
• The ongoing delays in filing annual and quarterly reports, coupled with the NYSE non-compliance notice and subsequent extension, are significantly below industry standards for public companies and raise serious concerns about financial reporting integrity and corporate governance.
• The disclosure of "not-fully remediated material weaknesses in internal controls over financial reporting" is a critical red flag, indicating a failure to meet fundamental financial reporting standards.

Corporate Governance

Legal Proceedings

• Ongoing litigation with Voodoo SAS.
• Ongoing litigation with Papaya Gaming.
• Suit filed against Tether Studios, LLC and Tether Games, Inc.

Stakeholder Impact

• Shareholders: Face uncertainty due to delayed filings, NYSE non-compliance, and potential for further adjustments to financial results. The stock price is likely to be negatively impacted by these governance issues despite some operational improvements.
• Employees: Potential impact on morale and stability due to ongoing company challenges and regulatory scrutiny.
• Customers (Players): Continued platform operation and engagement, but potential reputational risk could affect user trust over time.
• Suppliers/Developers: Continued relationships with third-party developers are crucial, but financial instability and governance issues could strain these partnerships.
• Creditors: The cash balance provides some liquidity, but ongoing losses and reporting issues could raise concerns about long-term financial health.

Next Steps

• Complete unaudited interim financial statements and other disclosures for Q3 2025.
• File an extension on Form 12b-25 with the SEC if the Q3 2025 Form 10-Q cannot be filed by the prescribed deadline.
• Complete the necessary work to file the Form 10-K for FY2024 and Form 10-Qs for Q1 2025 and Q2 2025 as soon as practicable.
• Take all necessary steps to achieve compliance with applicable NYSE listing standards by December 17, 2025.
• Host a live conference call at 8:30 a.m. ET on November 6, 2025.

Key Dates

Recommendation

Despite some positive operational metrics like revenue growth and improved Adjusted EBITDA loss, the severe and persistent financial reporting delays, NYSE non-compliance, and the disclosure of "not-fully remediated material weaknesses in internal controls over financial reporting" present significant red flags. The adjustments to prior preliminary results further undermine confidence in the company's financial statements. These governance and compliance issues create substantial uncertainty and risk for investors, making the stock highly speculative. A seasoned investor would likely view these systemic issues as outweighing any short-term operational improvements, suggesting a "sell" recommendation until the company demonstrates consistent and reliable financial reporting and resolves its compliance issues.

Keywords

Skillz, SKLZ, mobile games, gaming platform, eSports, ad-tech, Aarki, financial results, Q3 2025, preliminary earnings, SEC filing, 8-K, NYSE compliance, financial delays, user growth, Adjusted EBITDA