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$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 2019Here 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)
It went public in December 2020Skillz provides a platform to turn any mobile game on iOS and Android into one you can play with other players (friends and strangers)
It thus turn any mobile game that integrates with its platform into an eSports platform where players can compete for points, prizes, cash… https://venturebeat.com/2020/12/17/skillz-starts-trading-as-a-public-company-as-mobile-esports-heats-up/
But how does it work?
Developers need to download Skillz’ software development kit (SDK)
Using this SDK, the developers set up their tournaments on the Skillz tournament management system
Gamers can log into their Skillz-powered games and compete with other players
Developers need to download Skillz’ software development kit (SDK) Using this SDK, the developers set up their tournaments on the Skillz tournament management system Gamers can log into their Skillz-powered games and compete with other players
Who makes money?
Players pay entry fees to compete in games
Winners take home their prizes
The game developer and Skillz split what’s left (50/50)
Players pay entry fees to compete in games Winners take home their prizes 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
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
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
9m in June 2016
12m in May 2017
15m in April 2018
18m in September 2018
9m in June 2016 12m in May 2017 15m in April 2018 18m in September 2018
“Every six months or so, the projections are growing, […] The speed with which esports is growing in mind-blowing.” - $SKLZ CEO by Dean Takahashi
Taken from
https://venturebeat.com/2017/05/02/skillz-hits-100-million-revenue-run-rate-with-mobile-esports-platform/
Taken from
https://venturebeat.com/2017/05/02/skillz-hits-100-million-revenue-run-rate-with-mobile-esports-platform/
What about the market?
According to Goldman Sachs, eSports revenue is set to reach $ 3B by 2022
With prize pools expected to grew by a CAGR of 30% over the 2019 - 2024 period https://venturebeat.com/2018/09/18/skillz-hits-400-million-revenue-run-rate-with-mobile-esports-platform/
According to Goldman Sachs, eSports revenue is set to reach $ 3B by 2022 With prize pools expected to grew by a CAGR of 30% over the 2019 - 2024 period https://venturebeat.com/2018/09/18/skillz-hits-400-million-revenue-run-rate-with-mobile-esports-platform/
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
According to Research And Markets, the global mobile gaming market is set to grow by 14% a year over the 2020 - 2025 period Driven by higher smartphone penetration, decline in costs of mobile internet and innovations (e.g cloud gaming & AR) https://www.researchandmarkets.com/reports/5176393/mobile-gaming-market-growth-trends-and
According to Statista, mobile games in the USA reached $ 18.3B in 2020 - up 19.5% YoY Revenue is expected to grow annually by 10% over the 2020 - 2025 period and reach $ 29.6B Driven by growing user penetration from 46% in 2020 to 53% in 2025 https://www.statista.com/outlook/211/109/mobile-games/united-states
This market is booming! Here is what Skillz’s CEO has to say:
“The Skillz platform capitalizes on the phenomenal growth of esports, […]
“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
https://venturebeat.com/2018/09/18/skillz-hits-400-million-revenue-run-rate-with-mobile-esports-platform/
https://venturebeat.com/2018/09/18/skillz-hits-400-million-revenue-run-rate-with-mobile-esports-platform/
“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?
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
Advisory board: Trip Hawkins, the co-founder of Electronic Arts
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 Advisory board: Trip Hawkins, the co-founder of Electronic Arts
$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 EuropeHere 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
https://techcrunch.com/2016/06/15/skillz-is-the-biggest-e-sports-company-gamers-have-never-heard-of/
https://techcrunch.com/2016/06/15/skillz-is-the-biggest-e-sports-company-gamers-have-never-heard-of/
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
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
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 debtThrough 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
THE BOTTOM LINE 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
Disclaimer - This is not investment advice in any form and investors are responsible for conducting their own research before investing.
Sources
✑ Investor presentation
✑ Company website
✑ Venture Beat
✑ Reuters
✑ TechCrunch
✑ Forbes
Sources
✑ Investor presentation
✑ Company website
✑ Venture Beat
✑ Reuters
✑ TechCrunch
✑ Forbes
✑ Goldman Sachs
✑ Statista
✑ Research And Markets
✑ Statista
✑ Research And Markets
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