Firy Inc. (SKLZ) Earnings Call Transcript & Summary

I'm proud to share that Skillz Inc. has rebranded to Firy Inc. with a ticker change to FIRY going into effect on June 22. For those of you who are new to our story, I'm Andrew Paradise, CEO and Founder of Firy. Firy is the rebirth of our company. It reflects the real evolution of how we operate, how we think and what we're building. It represents something deeper than a rebrand. The name comes from imagery of a Phoenix Rising, something that burns intensely, takes everything thrown at it and it comes out the other side transformed. You're going to laugh, but the runner up was Bennu, which is ancient Egyptian for Phoenix. It really didn't roll off the tongue, so it landed on Firy, old English for Firy to burn rightly. For a company that's been through what we've been through, thought the way we thought and come out building something more exciting than what we started with, the name felt appropriate for the next chapter of our 100-year journey. And now a message from our attorneys. Our time line has 2 stories I want to tell. One about our company and what about the industry we formed. Starting with our company. Skills built a category that didn't exist. Pre-2012, if you want to compete in a mobile game for real prizes, you simply couldn't. With 90-plus patents and 110 pending, we created the category. We were told it would be a $200 million category in the next 10 years. Today, it's over $15 billion. By 2017, we won the Inc. 5000 as the #1 fastest-growing company at 50,000 applicants. In 2020, we took the company public on the New York Stock Exchange. We built and won the category we created. Now the second story. After we went public, we found new competitors concerned businesses running bots instead of having real players. These companies were defrauding the market we created. And we proved it in 2024 against AviaGames and settled our lawsuits with them for $80 million. In April of '26, we proved it again against Papaya Gaming and a federal jury awarded us over $420 million, the largest false advertising verdict in U.S. history. Subsequently, we've requested the court award of enhanced damages of over $1.4 billion, which we expect the final judgment this year. While we navigated these bad actors, we kept building, the company that was attacked fought back one is the one standing in front of you today. So with that of the way, let's move into our portfolio. Skillz is a pioneer in mobile skilled gaming. In '21, we acquired RZR, our AI performance advertising platform. In '26, we acquired Beamable, our back-end live ops infrastructure for game developers, 3 businesses, each growing on its own. Our businesses are complementary and they serve the same customer, the game developer. Skillz handles monetization and competition. RZR handles user acquisition and retargeting, Beamable handles infrastructure and live ops. Same potential customer, 3 different moments in their journey. No other platform brings together real money gaming infrastructure, performance advertising and developer life cycle tooling, all under one operating structure. Each of these businesses can succeed independently, but the opportunity comes from how they strengthen each other. So here's how the flywheel works. RZR brings the players, Skillz brings the developers and the competitive gaming infrastructure, Beamable captures and operationalizes the data. More players attract more developers, more developers create more games and more content, more games generate more data and more data makes every product in the portfolio better. Better products drive better monetization and retention and better retention attracts more players and then the cycle starts again. It's a 3-sided network effect. Each side strengthens the other 2. It's an advantage that accelerates with every player, every developer, every data point added to the system. Most businesses become more valuable because they get bigger. We believe Firy becomes more valuable because it gets smarter. That's how we uniquely create enhanced profitability over time. We launched Firy because investors don't yet understand the fundamental shift in where our businesses are going. Skillz remains this important business to us and will continue as our gaming sub-brand, but Skillz is no longer the full story. Firy is the technology company that we've been building underneath it. So here's why we believe this is a superior operating structure. Each business runs independently, serves its own third-party customers, builds its own products and generates its own revenue, but each also has the opportunity to strengthen the others. We don't force the businesses to work together. We organize them so they can. Cross-selling where it creates value, sharing best practices where it creates leverage, building interoperability where it creates advantage. The benefit flows in both directions without creating dependency. The economics of the proof our strategy is working. The businesses are growing and becoming more profitable. Revenue is forecast to more than double from 2025 to 2028. Cash generation improves every year, and we're moving from stabilization to growth. Before I take you through each business individually, I want to explain how they help each other reach their full potential. Skillz is evolving into a social network built around competition. Beamable helps skills get there by providing the engagement, CRM and life cycle tools needed to deepen player relationships. RZR helps skills get there by making player acquisition, retention and monetization more efficient. RZR benefits from something no stand-alone advertising platform can easily replicate, scaled first-party data, real customer behavior and real transaction behavior. Beamable benefits from assets that already exist inside the Firy ecosystem. Skillz payment rails, compliance infrastructure and identity extend into Beamable. Every new game, every new player, every new signal improves Firy's competitive moat. So let's step back for a moment. Gaming is one of the first and earliest digital businesses. The product, the customer, the experience is digital. There are very few industries that place greater demands on technology in the world. Payments, real-time systems, matchmaking, engagement. Developers have historically pushed these technologies forward because their products required it. That's why gaming has consistently been one of the most innovative sectors on the Internet and why the infrastructure serving game developers matters so much. So with that out of the way in that overview, let's start with walking through Skillz. This is where the story began, and it remains the foundation of the Firy ecosystem. Skillz is often misunderstood as just a gaming business. It's much more. It's a competition infrastructure platform that lives inside of games. We have more than 90 issued patents with one patent already enforced in court. We have an additional 110 pending. This isn't just a feature set. It's an IP mode, and it becomes wider every year as we continue to pioneer. The platform continues to evolve. Today, we operate across first-party, second-party and third-party content. 3 of our top 5 hotels on the platform by revenue are now owned and operated by Skillz. We have 90 million lifetime users, 6 million-plus payment accounts. This is almost entirely U.S.-based. We have a deep relationship with the consumer on an active media platform. And competition is inherently social. People compete against friends and they seek community. Our vision is to turn this gaming experience into a social network over time. Skillz Arena, which just has launched is our single app product. It's the hub. The games and the content act as the spokes. Every player and game strengthen this network. Every user brings the same identity, wallet, social graph, competitive history as they move across these products. The platform acts as the infrastructure for what we're building into a network. Okay. Now that I've explained Skillz future, let's move to RZR. This is the fastest-growing business in Firy's portfolio. So we acquired RZR in 2021. We rebuilt the platform from the ground up, new machine learning systems, leadership and architecture. Today, RZR is innovating in its space and releasing self-funded products. The data advantage behind it is real. Skillz has spent more than a decade building relationships with real money players, real signals that most advertising platforms never have access to. That data feeds the system. The system gets smarter and smarter models produce better outcomes for RZR's customers. The longer the platform operates, the more products it can offer, the stronger the advantage becomes. The predominance of all advertising platforms were built prior to the AI era, just as trading floors were built for human decision-making before algorithmic trading. Salespeople and traders on Wall Street once operated dashboards, analyze reports, made decisions, Ad buyers and sellers have been doing the same up until very recently. And when Wall Street was disrupted, they didn't just add machine learning and technology on top of old infrastructure. They rebuilt for quant models, systematic execution, machine-driven outcomes, things like high-frequency trading were born. The ad industry in the last 5 years is undergoing a similar transition. Rebuilding RZR in '22 to '24 for AI makes it one of the first intelligent systems that will make those decisions. And the future looks different in the Agentic world. The winners will not have the best dashboards. They'll have the best data models, the best infrastructure and the ability to operate on behalf of the buyer and the seller to optimize inventory. That quadrant remains relatively scarce for competition today, and we believe RZR is positioned to get there first. Okay. Now that I've walked through Skillz and RZR, let's move to Beamable. This is the newest business in the theory portfolio. Beamable in many ways, completes our ecosystem. Beamable brings decades of experience in the game developer community into our business. The products today provide developer infrastructure, live services, analytics, identity and operational tooling. The common theme is making the developer's life easier. Developers spend less time managing infrastructure, more time focusing on building great content. This is very aligned with the mission for Skillz and for RZR of enabling the developer. Beamable serves a wide array of game developers and brings a book of business to our company that is entirely different from RZR and from Skillz. When Beamable, Skillz and RZR work together, the data connects, the capabilities expand and the value of the ecosystem increases. Over time, we'll broaden Beamable's offering from live ops, which is an industry term for engagement marketing to offer more of core skills systems. Skillz payment rails, compliance, identity, they can all be extended into Beamable service offering. Beamable is building infrastructure technologies for the gaming industry with Skillz as a first customer, and every tech we build gets market validated by Skillz. EXperience already created a multibillion-dollar category, survived the tech, quietly rebuilt and is now emerging to continue our journey to build a 100-year company. Today, we operate across competition, advertising and developer infrastructure. Tomorrow, we may expand to adjacent categories such as payments, identity and e-commerce. We're building systems that compound through network effects, and I believe we're still much closer to the beginning than that. We started Skillz in 2012 on a simple conviction, that competition makes games better and that skill should be the thing that wins. That conviction built a platform than a business than a category. The last few years tested whether the company could have last its own ambition. It did. We rebuilt the foundation. We brought discipline to the model. We proved the unit economics work in the open. So what comes next isn't a recovery story. It's a company with a platform and ad engine and the tools to build on both pointed at one of the largest entertainment markets on earth. I've been building this company since 2012 through every chapter, the good and the hard. And I believe the next one is the most interesting yet. Thank you.