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Subsequent Events
3 Months Ended
Mar. 31, 2025
Subsequent Events [Abstract]  
Subsequent Events Subsequent Events
For the purpose of the condensed consolidated financial statements as of March 31, 2025, the Company evaluated subsequent events for recognition and measurement purposes as of the filing date. Except as described elsewhere in these condensed consolidated financial statements, the Company has concluded that no events or transactions have occurred that require disclosure except as follows:

License Agreement Dispute

In April 2022, the Company entered an agreement with a holder of intellectual property (the “Partner”) pursuant to which the Company would develop and market mobile games with the Partner’s brand and the Partner would use “good faith efforts” to promote the games. In consideration, the Company would pay the Partner minimum royalties totaling $1.5 million, but not to exceed $2.0 million, of which $0.5 million had been accrued as of December 31, 2024. The Company contended that the Partner failed to provide good faith efforts to market and, as a result withheld royalty payments. The Partner contended that the Company was in breach of the agreement due to non-payment of royalty payments. The Partner served the Company a
complaint on January 14, 2025. In April 2025, the Partner and the Company agreed to attend mediation on this matter and settled the matter for a payment of $0.5 million to the Partner in June 2025.

Termination of Operating Lease

On April 18, 2025, the Company and the lessor of its former headquarters in San Francisco mutually agreed to terminate the lease. In exchange for the mutual releases, the Company paid the lessor a lump sum payment of $14.0 million. The loss on termination of the operating lease of $0.4 million represented the difference between the settlement amount and the carrying value of the lease obligation, and was recorded as a component of other income (expense), net in the statement of operations for the year ended December 31, 2024.

Recovery of Legal Settlement

After receiving a total of $9.8 million from the D&O insurance carrier of the Flying Eagle legal matter, (see Note 8, Commitments and Contingencies) the Company, in July 2025, paid a settlement of $10.0 million on this matter which the court approved in September 2025.

Skillz v. Tether Litigation

On August 29, 2025, the Company received a notice (“Notice”) from Tether indicating that Tether is terminating all of its various agreements with the Company (the “Tether Agreements”), including the Company’s Developer Terms and Conditions of Service, as amended from time to time, including by that certain Amendment to Skillz Online Developer Terms and Conditions of Service, dated January 15, 2020, effective as of September 1, 2025. The Company believes the termination notice to be invalid and in breach of Tether’s obligations under the Tether Agreements.

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. 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. On October 10, 2025, Tether filed counterclaims against Skillz, alleging: (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) accounting; (4) unjust enrichment; (5) false designation of origin, false association, and/or unfair competition; and (6) violation of deceptive trade practice at, 6 Del. C. Section 2532. Tether alleges its damages exceed $1 million. On November 13, 2025, Skillz moved to dismiss the majority of Tether’s counterclaims. Skillz motion to dismiss is set for hearing on January 23, 2026. A trial has been scheduled for Skillz’s affirmative claims against Tether and Tether’s counterclaims in August 2026. (see Note 8, Commitments and Contingencies).

Hanna v. Paradise, et. al.

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. Further briefing in support of summary judgment on demand futility grounds is expected, but no schedule is currently in place for such briefing (see Note 8, Commitments and Contingencies).

Purchase of Treasury Stock

On August 18, 2023, the Board authorized the Company 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, par value $0.0001 per share (the “Common Stock”), having an aggregate purchase price not to exceed $65.0 million (a) on the New York Stock Exchange (the “NYSE”) or any other national securities exchange on which the Common Stock is then traded, (b) pursuant to a plan effected pursuant to Rule 10b5-1 (a “Rule 10b5-1 Plan”) promulgated under the Exchange Act, and/or (c) pursuant to accelerated share repurchase arrangements, tender offers, privately negotiated transactions or otherwise (the “Share Repurchase Program”). On December 5, 2024, the Board reapproved the Share Repurchase Program and extended the expiration date until otherwise suspended, terminated or modified at any time for any reason by the Board.
Subsequent to March 31, 2025 through December 5, 2025, the Company has repurchased 0.8 million shares of its common stock under the Share Repurchase Program (see Note 9, Share Repurchase Program) at an average price of $5.26 share for a total cost (including commission) of $4.1 million.

Skillz v. Papaya Litigation

On October 28, 2025, the Judge denied Papaya’s motion for summary judgment as to Skillz’s claims against Papaya. The Court also denied Papaya’s motion to exclude Skillz’s survey and damages experts. On November 24, 2025, the Court granted Skillz’s motion for summary judgment on Papaya’s remaining counterclaims and unclean hands defense. The court’s rulings on certain motions related to the administration of expert testimony remain pending (see Note 8, Commitments and Contingencies).

New Tax Law

On July 4, 2025, U.S. Congress enacted the One Big Beautiful Bill Act (“OBBBA”), which includes significant provision, including tax cut extensions and modifications to the international tax framework. In accordance with GAAP, the Company will account for the tax effects of changes in tax law in the period of enactment which is in the quarter ending September 30, 2025. The Company is currently in the process of analyzing the tax impacts of the law change, and it currently does not expect the OBBBA to have a material impact on its condensed consolidated financial statements.

Notice of Default

In light of the delays in the filing of the Company’s annual financial statements on its Form 10-K for the year ended December 31, 2024 and the interim financial statements on Form 10-Q for the quarters ended March 31, 2025, June 30, 2025, on September 30, 2025, the Company received a notice of default (the “Notice of Default”) from UMB Bank, N.A., as trustee (the “Trustee”) under that certain Indenture, dated as of December 20, 2021, between the Company, each of the guarantors party thereto and the Trustee (“Indenture”), pertaining to the Company’s outstanding 2021 Senior Secured Notes. The Notice of Default provided that the Company was not in compliance under the terms of the Indenture as a result of the Company’s failure to timely provide the required quarterly and annual reports within the time periods required under the Exchange Act. Pursuant to the terms of the Indenture, the receipt of the Notice of Default will not result in an Event of Default (as such term is defined under the Indenture) unless the Company remains out of compliance with this reporting covenant for 120 days following receipt of the Notice of Default.

Pursuant to the Indenture, the Company will be deemed to regain compliance with these reporting covenants if it provides all applicable delayed filings within 120 days of receipt of the Notice of Default. The filing of the Annual Report on Form 10-K on November 6, 2025 constituted, and the filing of this quarterly report for the quarter ending March 31, 2025 will constitute, compliance with a portion of reporting covenant under the Indenture. The filing of the remaining Quarterly Reports on Form 10-Q will constitute compliance with the remaining portions of the reporting covenant under the Indenture and the Company is further taking the necessary steps to file its Quarterly Report on Form 10-Q for the quarters ended June 30, 2025 and September 30, 2025 as soon as practicable, in order to regain compliance with the terms of the Indenture.