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Skillz's Earnings -- the Good and the Bad

By Jose Najarro – Aug 4, 2021 at 11:00AM

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The advertisement expenses for Skillz could be a huge yellow flag for investors.

Skillz (SKLZ -2.80%) reported earnings on August 3 after the market closed. In today's video I look at Skillz's earnings report and talk about some of the strong and weak points presented to investors. Here are some highlights from the video:

  1. Skillz reported 52% year-over-year (YOY) revenue growth, 53% YOY paying monthly active user growth, and a YOY decline of monthly active users for its second-quarter 2021 earnings. 
  2. One of the most prominent yellow flags investors might see is that Skillz spends more money on sales and marketing than it collects in revenue. Skillz focuses on two types of marketing. The first is user acquisition, which is getting new users to use Skillz's application. The second is user engagement marketing, which focuses on improving retention and generating more revenue. 
  3. Skillz ended the quarter with no debt and plenty of cash in its balance sheet. Skillz updated its full-year 2021 guidance to account for its acquisition of Aarki. The business combination with Aarki will help Skillz alleviate some of its marketing expenses.  

Click the video below for my full thoughts and analysis. 

*Stock prices used were the closed prices of August 3, 2021. The video was published on August 3, 2021.

Jose Najarro owns shares of Skillz Inc. The Motley Fool owns shares of and recommends Skillz Inc. The Motley Fool has a disclosure policy. Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Stocks Mentioned

Skillz Inc. Stock Quote
Skillz Inc.
$0.98 (-2.80%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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