JD Durkin: Say hello to Andrew Paradise, the CEO of Firy. Andrew, really nice to have you here on the show today. You co-founded Skillz back in 2012, originally for real-money, skill-based mobile gaming. But this year, you and the team are undergoing a bit of a rebrand. Why go from Skillz to what you are now called, Firy?
Andrew Paradise: Sure. It’s really to acknowledge that Skillz has transitioned into being a technology portfolio with the game developer as our shared customer. So our business, Aarki, helps game developers advertise and acquire users. Skillz, the competition platform that we invented 15 years ago, helps turn them into revenue through competition. And then Beamable, the business we purchased in January, keeps players playing on the system during gaming.
JD Durkin: Andrew, I’ve got to imagine a cleaner balance sheet has to be a really big part of all this. Why was getting debt-free such a big priority, and how did you go about doing it?
Andrew Paradise: Yeah. So in the last two days, we announced two things. First, our sale of our stake in Exit Games for $55 million. And then second, we announced our intention to retire the rest of our debt.
With the business continuing to grow, now we’re projecting modest positive operating cash flow in 2027, and we believe that revenue will more than double from 2025 to 2028. So momentum is really building, and we’re really focusing on the next chapter of the business.
JD Durkin: Well, part of that next chapter includes a lot of different entities under your current business. Let’s drill down and talk about one of them. Aarki, you just cleared your first $10 million revenue quarter. What is fueling it, and how big can it get?
Andrew Paradise: Yeah. So we bought Aarki in 2021. We rebuilt the AI engine in the business from the ground up. We actually own our own servers in Aarki, so it’s unusual for an ad tech to do that. We analyze six million ad opportunities per second, and the business is all about placing the right ad in front of the right user at the right moment.
Growth is coming from two places. We’re expanding in our existing gaming base. We’re also moving into non-gaming customers. And yes, it was exciting to see Q2 break $10 million for the first time. I think we are pretty excited about the future for Aarki over these next few quarters in particular.
JD Durkin: I’ve got to ask you about the big case against Papaya Gaming for, I believe, among other things, false advertising. $730 million judgment. How do you turn that big court win into actual cash, and what does that allow you to do?
Andrew Paradise: Yeah, this is one near and dear to me as the founder of the business. Papaya was found liable for using bots to run fake competitions against real people. So acting like they were running the same business as Skillz, but actually they advertised over $4.5 billion of fake prizes to consumers across the United States.
The court awarded us approximately $730 million. Immediately following, perhaps not surprisingly, Papaya filed bankruptcy protection in Israel and in Delaware. They have a temporary stay on collection activity right now on the U.S. assets. We’re obviously challenging that position.
They proposed a repayment plan in the Tel Aviv court over six and a half years, which the court found to be inadequate and rejected, and asked them to come back with a better plan.
Per their own court filings, they have $151 million in cash. They generate about $500 million in revenue at gross margins over 90%. So no assurance can be given on what the recovery is going to be. We are obviously very focused on it, and we’ll keep the market apprised as we have any updates in the process.
JD Durkin: Yeah, please do. Please come see us with more updates. Andrew Paradise, CEO of Firy. Really nice to welcome you onto Taking Stock today. We’ll talk again soon.
