🚨 $SKLZ +90% Growth SPAC 🚨

🎮 eSports is set to grow by 30% each YEAR over 2019 - 2024 period (Goldman Sachs)

🔥 Skillz provides the engine that powers the mobile eSports format

📈 Its GMW went from $ 20m in 2015 to $ 886m in 2019

Here is an EASY thread
Skillz $SKLZ was founded in 2012 by Andrew Paradise and Casey Chafkin 🏦 It went public in December 2020

Skillz provides a platform to turn any mobile game on iOS and Android into one you can play with other players (friends and strangers)
But how does it work?

1️⃣ Developers need to download Skillz’ software development kit (SDK)

2️⃣ Using this SDK, the developers set up their tournaments on the Skillz tournament management system

3️⃣ Gamers can log into their Skillz-powered games and compete with other players
Who makes money?

1️⃣ Players pay entry fees to compete in games

2️⃣ Winners take home their prizes

3️⃣ The game developer and Skillz split what’s left (50/50)
What’s more? Well Skillz has developed and offers a wide range of features to attract and retain gamers

✅ Player matching based on their skill level

✅ Anti-cheat / anti-fraud protections and support

✅ Social sharing and content discovery features
Delivering results for game developers and gamers

📈 Average time players spend each day on Skillz is twice the industry average and player retention is 24% higher

🎮 Skillz counts over 30m players and 20k game developers

👉 Of these, 2.7m are active monthly users
🔥 More than 3.5m tournaments take place each day, distributing $ 60m in prizes each month

👉 Skillz expects to power 2B tournaments in 2020, including 500m paid entry tournaments
💸 Great! But how does that translate into SALES?

In 2015, Skillz brought in $ 20m in entry fees

In 2016, Skillz brought in $ 56m in entry fees

In May 2017, Skillz hit $ 100m revenue run rate (RRR)

In February 2018, it hit $ 200m RRR

In September 2018, it hit $ 400m RRR
Supported by steady player growth

1️⃣ 9m in June 2016

2️⃣ 12m in May 2017

3️⃣ 15m in April 2018

4️⃣ 18m in September 2018
🌐 According to Research And Markets, the eSports market is set to grew by a CAGR of 20% over the 2020 - 2025 period and reach $3B

👉 Driven by the growing popularity of eSports on a global level and increasing game publishers support https://www.researchandmarkets.com/reports/4792907/global-esports-market-forecast-up-to-2025
This market is booming! Here is what Skillz’s CEO has to say:

1️⃣ “The Skillz platform capitalizes on the phenomenal growth of esports, […]
...We are the first company to democratize esports for players and game developers, and the first company to do it at scale.” by Dean Takahashi for Venture Beat

2️⃣ “Mobile gaming keeps growing at crazy rates. It is now half of the total gaming market, but it was less than a fifth in 2012 when we started.” by Dean Takahashi for Venture Beat
Great numbers! But who is leading this company?

1️⃣ CEO: Andrew Paradise, founded AisleBuyer and sold it to Intuit for 80 to $ 100m. Also founded Double Picture and sold it to MPA in 2010

2️⃣ Advisory board: Trip Hawkins, the co-founder of Electronic Arts
3️⃣ $FEAC Lead: Harry Sloan, who lead the $DKNG SPAC, was the CEO and Chairman of MGM and built SBS Broadcasting into the second largest broadcaster in Europe

Here is what Trip Hawkins had to say on Skillz back in 2016 👇
“there has to be a set of platform features to let players have accounts set up the way they need, be able to communicate and broadcast or be broadcast,...
...make payments, manage transactions and receive prizes. That’s where Skillz has a head start.” by Lora Kolodny for TechCrunch

What about alternatives? Well, $SKLZ is a pioneer in its own genre

💀 Initially, many people were sceptical at the idea of “mobile eSports”

👉 It was thought that only dedicated gamers (on PC and consoles) would be attracted to this format
✅ But mobile gaming took on and supported $SKLZ extraordinary growth, as Venture Beat reports

“By 2018, Skillz had hit a $400 million run rate. Rivals like Sony and Amazon took Skillz on, but they faltered.” by Dean Takahashi for Venture Beat
Great! This means 👇

✅ Skillz has experienced rapid growth since its launch growing its GMV from $ 20m in 2015 to $ 886m in 2019

✅ The market for mobile gaming and eSports is growing fast, driven by increasing user penetration, reduction in internet costs and innovations
✅ Its management has a strong entrepreneurial, corporate and gaming track record

✅ It virtually invented its own format has competition chose to focus on the PC and consoles segment
💸 Financials Check 💸

🎮 Gross Marketplace Volume (GMV) grew 76% to $ 411m in Q3 ’20 versus $ 234m a year earlier

📈 Net sales grew 92% YoY in Q3 ’20 to $ 60m with net sales YTD reaching $ 162m (up 91% YoY)
💎 Gross margins stood at 95% (constant YoY) and gross profit increased by 92% to $ 56.9m versus $ 29.6m a year earlier

👤 Sales and marketing expenses grew 151% to $ 73m

📉 Loss from operations reached $ 28m up from a loss of $ 7m a year earlier
💰 Current assets stood at $ 66.8m versus $ 40.1m in current liabilities and has no LT debt

Through the $FEAC merger, Skillz got around $ 240m in net proceeds and has not debt

👉 The company raised $ 848m through the SPAC, of which $ 608m went to early-stage investors
👉 Around $ 690m came from the SPAC and $ 158m from follow-on investors

✅ Skillz quickly saw the potential for eSports in the mobile gaming market and its exploded as the format attracted bot players and developers

✅ Skillz quickly understood that players of varying experience want to play online - not only advanced players
✅ It therefore developed a range of data-driven tools to match players and monitor cheating

✅ Translating into high player retention (24% above industry average), above average revenue per user (ARPU of $ 6.3 vs $ 1.7 for $ZNGA and $GLUU) and longer time spent on games
✅ Sales are growing at above 90% YoY growth rates all while gross margins expand - but growth is partially driven by large increases in marketing spending
🚩 Game developers might build their own eSports solutions in-house and build their own “leagues” in order to retain players in their ecosystem

🚩 Skillz large increase in marketing spend may reflect slowing customer interest as the economy re-opens
🔥 We have a starter position in $SKLZ 🔥

🔮 $RKT is on our watchlist 👉 To Be Reviewed SOON 🔮
Disclaimer - This is not investment advice in any form and investors are responsible for conducting their own research before investing.


✑ Investor presentation

✑ Company website

✑ Venture Beat

✑ Reuters

✑ TechCrunch

✑ Forbes
✑ Goldman Sachs

✑ Statista

✑ Research And Markets
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