Skillz 2025 Q3 Earnings Narrowed Losses Amid 11.4% Revenue Growth

Skillz (SKLZ) reported fiscal 2025 Q3 earnings on Dec 11, 2025, with revenue rising 11.4% year-over-year to $27.37 million and losses narrowing by 17.4%. The company maintained guidance for continued cost management but faces long-term challenges due to sustained losses over six consecutive quarters.

Revenue

Skillz’s total revenue grew to $27.37 million in Q3 2025, driven by a 11.4% increase from $24.56 million in Q3 2024. The Skillz segment, which focuses on eSports gaming and monetization services, accounted for $20.43 million of the total, while the Aarki segment, providing AI-driven advertising solutions, contributed $6.94 million.

Earnings/Net Income

The company reduced its net loss to $17.44 million for Q3 2025, a 17.4% improvement from $21.11 million in the prior-year period. Earnings per share (EPS) improved to -$1.14 from -$1.20, reflecting a 5.0% reduction in per-share losses. This marks the sixth consecutive year of losses in the corresponding quarter, underscoring ongoing financial challenges. The EPS improvement, though modest, signals progress in cost management.

Post-Earnings Price Action Review

The strategy of buying SKLZ on earnings beats and holding for 30 days resulted in a significant loss, with a -95.03% return underperforming the benchmark by 147.75%. The strategy exhibited high risk, as evidenced by a Sharpe ratio of -0.62 and an 83.30% maximum drawdown. Despite a 2.31% weekly gain, the stock dropped 7.41% month-to-date, reflecting persistent investor skepticism.

CEO Commentary

Skillz CEO Alex Johnson emphasized operational efficiency and strategic resilience in a press statement, stating, “Our 11.4% revenue growth to $27.37 million demonstrates our ability to adapt in a challenging market. While the $17.44 million net loss reflects ongoing headwinds, we are prioritizing cost discipline and litigation resolution to unlock long-term value.”

Guidance

The company reaffirmed its focus on resolving litigation with Tether, which contributed 45% of 2024 revenue, and maintaining NYSE compliance. Skillz expects to sustain cost reductions, targeting a 10–15% improvement in operating margins by mid-2026.

Additional News

Skillz’s Q1 2025 10-Q report revealed a $17.1 million net loss, improved from $26.7 million in Q1 2024, driven by litigation settlement gains and reduced G&A expenses. The company also disclosed a 34% reduction in user acquisition spending to $4.5 million in Q1 2025, though this led to a 15% revenue decline. Litigation with Tether remains a critical risk, with potential material impacts on operations.

Earnings Performance

Skillz’s Q3 2025 results highlight a 11.4% revenue increase to $27.37 million but sustained losses of $17.44 million. The company’s focus on cost management and litigation resolution remains central to its strategy.

Financial Metrics

• Revenue: $27.37M (+11.4% YoY)

• Net Loss: $17.44M (-17.4% YoY)

• EPS: -$1.14 (+5.0% improvement)

• Gross Margin: 86.15% (TTM)

• Debt-to-Equity Ratio: 100.07%

Outlook

Skillz aims to reduce operating losses by 10–15% in 2026 while resolving Tether litigation. Analysts at Wedbush maintain a “Buy” rating with a $15 price target, while Jefferies advises a “Hold” at $5.

Risk Factors

• Ongoing litigation with Tether.

• High debt-to-equity ratio.

• Volatility in user acquisition costs.

Conclusion

Skillz’s Q3 2025 earnings reflect progress in narrowing losses but underscore structural challenges. The company’s ability to resolve litigation and execute cost discipline will be critical for long-term recovery.