skillz(US:SKLZ)2025-12-11 22:20Financial Performance - Revenue decreased by $0.1 million, or less than 0.1%, to $25.2 million for the three months ended June 30, 2025, compared to $25.3 million for the same period in 2024 [188]. - Revenue decreased by $3.4 million, or 7%, to $47.1 million for the six months ended June 30, 2025, from $50.5 million in 2024 [199]. - Net loss for the three months ended June 30, 2025, was $17.9 million, compared to a net income of $26.0 million in the same period in 2024, representing a decrease of $43.9 million [197]. - Total costs and expenses increased by $26.8 million, or 52%, to $78.6 million for the six months ended June 30, 2025, compared to $51.8 million in 2024 [198]. - Net cash used in operating activities was $31.7 million for the six months ended June 30, 2025, primarily reflecting a net loss of $35.1 million [213]. User Acquisition and Marketing - User acquisition (UA) marketing spend for the six months ending June 30, 2025, was approximately $8.1 million, down from approximately $9.8 million for the same period in 2024, indicating a reduction in marketing expenses that is expected to continue impacting revenue negatively [173]. - Engagement marketing expenses may be impacted by end-user incentives, including Bonus Cash, which could affect user engagement on the platform [172]. - Sales and marketing costs decreased by $4.4 million, or 21%, to $16.4 million for the three months ended June 30, 2025, compared to $20.8 million in 2024 [191]. Legal and Compliance - The company filed suit against Tether for breach of agreements, seeking injunctive and declaratory relief, with potential implications for its business if the litigation is unsuccessful [176]. - The company is involved in ongoing litigation related to its De-SPAC process, with an insurance recovery of $9.75 million recorded as an offset to general and administrative expenses [182]. - The company presented a compliance plan to the NYSE in September 2025, requesting an extension to continue listing its shares, which was granted through December 17, 2025 [179]. Revenue Sources and Dependencies - Tether accounted for 45% of the company's revenue for the year ended December 31, 2024, and the termination of agreements with Tether could have a material adverse effect on business operations if suitable replacements are not identified [175]. - The company received a total of $50 million from AviaGames as part of a settlement agreement, with Skillz receiving $48 million, which included a $2 million repayment under a Loan and Security Agreement [182]. - The company recorded a gain of $46 million from a litigation settlement with AviaGames, netting the gross payment received [182]. Costs and Expenses - General and administrative costs decreased by $0.5 million, or 3%, to $16.7 million for the three months ended June 30, 2025, from $17.2 million in 2024 [192]. - Research and development costs increased by $0.6 million, or 13%, to $4.8 million for the three months ended June 30, 2025, from $4.3 million in the same period in 2024 [190]. Financial Position - As of June 30, 2025, the company had cash, cash equivalents, and restricted cash totaling $238.7 million [208]. - As of June 30, 2025, the company has lease payment obligations totaling $0.3 million, all of which is due within 12 months [217]. - The company's long-term debt consists of the 2021 Senior Secured Notes, with a total principal amount of $129.7 million due on December 15, 2026 [218]. - There are currently no off-balance sheet financing arrangements or relationships with unconsolidated entities [219]. - There have been no material changes to the critical accounting policies and estimates as noted in the Annual Report [220]. - Recent accounting pronouncements and their potential impact on financial condition and results of operations are detailed in the condensed consolidated financial statements [221]. Business Segments and Technology - The company’s operating segments include Skillz and Aarki, with Aarki focusing on AI-driven advertising solutions for mobile app developers [183]. - The company’s technological capabilities include a software development kit (SDK) that allows developers to monitor and update their games seamlessly, enhancing data-driven algorithms [170].