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Skillz (SKLZ)
NYSE:SKLZ
US Market

Skillz (SKLZ) AI Stock Analysis

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Skillz

(NYSE:SKLZ)

Rating:57Neutral
Price Target:
$7.50
▲(4.02%Upside)
Skillz's overall stock score reflects substantial financial challenges, mitigated by some technical strength and strategic improvements. While the company shows positive sequential growth and improved user metrics, its negative profitability and valuation concerns weigh heavily. Compliance and litigation issues further add to the risk profile.
Positive Factors
Patent Settlements
Incremental settlements in patent infringement lawsuits have helped fund product development initiatives, and management believes successful litigation could lead to a significant unlock in monthly active user expansion.
User Base Growth
There has been a third consecutive quarter of stability in the paying user base with a 5% growth in overall monthly active users.
Negative Factors
EBITDA Challenges
Until Skillz delivers more material top-line growth, there is reluctance to commit to positive adjusted EBITDA in any of the next ten quarters.
Revenue Decline
Revenue and GMV are both still declining at a greater than 30% year-over-year pace.

Skillz (SKLZ) vs. SPDR S&P 500 ETF (SPY)

Skillz Business Overview & Revenue Model

Company DescriptionSkillz Inc. is a technology company that operates in the mobile gaming industry. It offers a competitive gaming platform that connects players worldwide through competitive, multiplayer tournaments. The platform is designed to enhance the gaming experience by integrating social competition into mobile games, allowing players to compete for cash prizes and virtual rewards. Skillz partners with game developers to host tournaments, enabling them to engage and monetize their user bases effectively.
How the Company Makes MoneySkillz generates revenue primarily through its platform fees, which are a percentage of the entry fees from the tournaments held on its platform. Players pay entry fees to participate in cash-prize tournaments, and Skillz takes a cut of these fees as its revenue. Additionally, the company collaborates with game developers, sharing the entry fee revenue while providing them with a platform to attract and engage users. Significant partnerships with developers enhance Skillz's game offerings and user engagement, further driving its revenue. The company also earns from in-app purchases and advertising within its gaming ecosystem.

Skillz Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: 36.55%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted positive sequential revenue growth and improvements in key metrics like user conversion rates and net loss reduction. However, it also revealed challenges such as year-over-year revenue decline, compliance issues with the NYSE, and ongoing litigation with competitors. The sentiment is mixed with both significant achievements and considerable challenges.
Q1-2025 Updates
Positive Updates
Sequential Revenue Growth
Revenue for Q1 was $22 million, reflecting a 21% increase sequentially from the previous quarter.
Improved Paying User Conversion Rate
The paying user conversion rate increased to 16.2% in Q1 from 14.6% in Q4 2024.
Significant Reduction in Net Loss
Net loss for Q1 was $15 million, compared to a net loss of $27 million in the prior year.
Strong Cash Position
Ended Q1 with $264 million in cash, including a $7.5 million payment received from AviaGames as part of a settlement.
Negative Updates
Year-over-Year Revenue Decline
Revenue decreased by 11% year-over-year.
Ongoing Compliance Issues
The company is not in compliance with NYSE listing standards and has delayed filing its Form 10-K.
Litigation Challenges
Ongoing lawsuits against Papaya and Voodoo due to alleged unfair practices and use of bots, which have impacted business.
Company Guidance
In the Skillz, Inc. 2025 First Quarter Results Call, guidance highlighted several key financial metrics and strategic initiatives. Revenue for the quarter was reported at $22 million, reflecting a 21% sequential increase but an 11% decline year-over-year. The company achieved a paid user conversion rate of 16.2%, up from 14.6% in the previous quarter. Research and development expenses stood at $5 million, marking a 4% increase year-over-year, while sales and marketing expenses decreased by 9% year-over-year to $19 million. General and administrative expenses were $16 million, down 29% year-over-year, and the adjusted EBITDA loss was reduced to $15 million from $19 million in the fourth quarter of 2024. Skillz ended the quarter with a strong balance sheet, holding $264 million in cash, including cash equivalents and restricted cash, and an outstanding debt principal of $129.7 million. The company emphasized its strategic focus on enhancing its platform, optimizing organizational structure, improving go-to-market strategies, and demonstrating a clear path to profitability, supported by a robust balance sheet and financial position.

Skillz Financial Statement Overview

Summary
Skillz faces significant financial challenges, marked by declining revenues and persistent losses. Despite strong gross profit margins, the company struggles with profitability, negative cash flow, and a declining asset base. Low leverage is a positive aspect, but the need for improved cash generation and revenue growth is critical.
Income Statement
45
Neutral
Skillz's income statement shows significant challenges with profitability. The TTM (Trailing-Twelve-Months) gross profit margin is strong at about 86%, indicating efficient cost management relative to revenue. However, the net profit margin is deeply negative, reflecting persistent losses in operations. Revenue has been declining over recent periods, with a notable drop from $384 million in 2021 to $93 million TTM, highlighting a concerning trend in growth.
Balance Sheet
55
Neutral
The balance sheet indicates moderate stability with a debt-to-equity ratio of approximately 0.07 TTM, showing low leverage. However, the equity ratio has been decreasing, with stockholders' equity declining alongside total assets, raising concerns about asset utilization and financial health. The return on equity is negative due to ongoing losses, underscoring profitability challenges.
Cash Flow
50
Neutral
Skillz's cash flow statement reveals struggles with cash generation. The free cash flow is negative, and the free cash flow to net income ratio is unfavorable, showing inefficiencies in converting revenue into cash. Operating cash flow is also negative, which along with declining free cash flow growth, signals potential liquidity issues.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue92.64M95.47M152.08M269.71M384.09M230.12M
Gross Profit79.73M82.06M136.70M238.99M359.38M217.83M
EBITDA-80.34M-48.35M-96.31M-402.04M-194.18M-142.46M
Net Income-36.44M-48.23M-101.36M-438.88M-181.38M-122.46M
Balance Sheet
Total Assets346.97M364.17M395.83M621.29M1.02B282.42M
Cash, Cash Equivalents and Short-Term Investments254.34M281.92M302.03M489.78M560.39M262.73M
Total Debt10.52M136.54M136.70M286.86M294.57M0.00
Total Liabilities189.74M192.58M185.34M342.89M399.13M47.40M
Stockholders Equity157.23M171.59M210.49M278.40M623.70M235.02M
Cash Flow
Free Cash Flow-15.97M-9.95M-84.99M-181.49M-183.39M-59.48M
Operating Cash Flow-11.83M-7.19M-71.76M-179.60M-180.15M-56.23M
Investing Cash Flow-3.69M-1.63M168.30M311.39M-643.92M-3.25M
Financing Cash Flow-20.74M-21.29M-149.95M-10.61M802.68M296.58M

Skillz Technical Analysis

Technical Analysis Sentiment
Positive
Last Price7.21
Price Trends
50DMA
6.21
Positive
100DMA
5.59
Positive
200DMA
5.59
Positive
Market Momentum
MACD
0.32
Negative
RSI
66.49
Neutral
STOCH
76.87
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SKLZ, the sentiment is Positive. The current price of 7.21 is above the 20-day moving average (MA) of 6.70, above the 50-day MA of 6.21, and above the 200-day MA of 5.59, indicating a bullish trend. The MACD of 0.32 indicates Negative momentum. The RSI at 66.49 is Neutral, neither overbought nor oversold. The STOCH value of 76.87 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SKLZ.

Skillz Risk Analysis

Skillz disclosed 49 risk factors in its most recent earnings report. Skillz reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Skillz Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
61
Neutral
$40.40B-0.91-12.15%3.89%2.03%-69.70%
LVLVO
58
Neutral
$73.69M154.70%11.43%26.78%
57
Neutral
$132.36M-21.26%-29.26%57.78%
52
Neutral
$15.08M-98.74%0.31%27.47%
CCCCG
47
Neutral
$59.91M-16.65%105.31%95.66%
46
Neutral
$27.67M-130.56%-26.11%57.68%
42
Neutral
$42.04M174.77%-1.52%22.36%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SKLZ
Skillz
7.21
0.53
7.93%
LVO
LiveOne
0.80
-0.64
-44.44%
DLPN
Dolphin Entertainment
1.28
-0.14
-9.86%
CCG
Cheche Group
0.74
-0.22
-22.92%
KORE
KORE Group Holdings
2.54
1.02
67.11%
BODI
Beachbody Company
4.15
-4.35
-51.18%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 03, 2025