Company: SKLZ
Filing Date: 2025-11-06
Form Type: 10-K
Source: 0001801661-25-000050
Chunk: 155

Company: Skillz Inc.
Filing Date: 2025-11-06
Form: 10-K
Item: Item 8
Chunk 155
---
 loss. The Company separately presents investments in non-marketable equity securities within long-term assets on the consolidated balance sheets.Variable Interest EntitiesA variable interest entity ("VIE") is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest. Under ASC 810 “Consolidation,” an entity that holds a variable interest in a VIE and meets certain requirements would be considered to be the primary beneficiary of the VIE and required to consolidate the VIE in its consolidated financial statements. In order to be considered the primary beneficiary of a VIE, an entity must hold a variable interest in the VIE and have both: •the power to direct the activities that most significantly impact the economic performance of the VIE; and•the right to receive benefits from, or the obligation to absorb losses of, the VIE that could be potentially significant to the VIE.The Company holds a cost method investment in Big Run Studios, Inc. (“Big Run”), a privately held variable interest entity and one of the Company’s top game developers. The Company determined that it is not the primary beneficiary as it does not have the power to direct the activities that most significantly impact the entity’s performance.  During the year ended December 31, 2023, the Company fully impaired the carrying value of its investment in Big Run of $2.9 million due to significant concerns about the entity’s ability to continue as a going concern. During 2023, the Company also loaned Big Run $2.0 million pursuant to a loan agreement for the purpose of allowing Big Run to meet its cash flow needs. This loan was fully repaid in 2024 (see Note 5, Balance Sheet Components). Advertising and Promotional ExpenseAdvertising and promotional expenses are included in sales and marketing expenses within the consolidated statements of operations and comprehensive loss and are expensed when incurred. For the years ended December 31, 2024 and 2023, advertising expenses, not including marketing promotions related to the Company’s end-user incentive programs, were $19.4 million and $30.7 million, respectively.User Acquisition      User acquisition (“UA”) marketing costs to acquire new paying users to the platform are presented in sales and marketing expenses in the consolidated statements of operations and comprehensive loss. UA marketing costs during the years ended December 31, 2024 and 2023 were approximately $18.4 million and