Skillz Inc Q1 2026 Earnings Recap

Shares rallied 18.2% after Skillz’s Q1 report, driven by a landmark $420 million legal verdict against Papaya Gaming supporting fair competition and underlying operational improvements evidenced by reduced adjusted EBITDA loss excluding litigation expenses.

Key Takeaways

• Q1 revenue declined 3% sequentially to $29 million but was up 33% year-over-year.
• Adjusted EBITDA loss increased to $13 million due to higher litigation costs; excluding these expenses, adjusted EBITDA loss improved 15% sequentially to $7 million.
• Paying monthly active users (PMAU) dropped 9% quarter-over-quarter to 128,000, partly from reduced user acquisition spend, though retention and average revenue per paying user increased.
• The jury awarded Skillz $420 million in actual damages against competitor Papaya for false advertising and deceptive practices, with potential total recovery exceeding $1.2 billion after possible enhancements.
• Management is pursuing settlement discussions and exploring capital strategies to monetize the judgment, while continuing initiatives to improve demand, platform performance, and marketing efficiency.