Skillz Earnings Miss, User Base Shrinks

Core Insights - Skillz reported a challenging fourth quarter with earnings missing expectations, highlighting ongoing difficulties in revenue and user retention [1][2] Financial Performance - Q4 2024 revenue was $20.4 million, down 34.5% from $31.1 million in Q4 2023, and below the FactSet estimate of $25 million [2][3] - The net loss for the quarter was $26.4 million, resulting in a GAAP EPS of ($1.50), missing the expected ($1.13) by 32.7% [2][6] - Paying Monthly Active Users (PMAU) decreased to 110,000 from 137,000, a decline of 19.7% [3][7] - Average Revenue Per Paying Monthly Active User (ARPPU) fell to $68.1 from $73.3, a decrease of 7.1% [3][8] - Adjusted EBITDA was $(18.5) million, worsening from $(7.3) million in the previous year [3] Business Model and Strategy - Skillz operates a platform for mobile gaming competitions, focusing on fair play and providing developers with tools for multiplayer capabilities [4] - The company is implementing a $75 million developer accelerator to enhance game innovation and user engagement [5] - Despite cost control efforts, operating expenses excluding revenue costs were $43.2 million, down 10.4% year-over-year [8] Recent Developments - A legal victory against AviaGames strengthened Skillz's market position, crucial for maintaining fair competition [9] - Management reported sequential increases in user counts from November 2024 through February 2025, indicating potential recovery [7] Future Outlook - Management aims for positive adjusted EBITDA by 2025, focusing on user acquisition, retention strategies, and operational enhancements [10][11] - The emphasis on fair play technologies is central to Skillz's competitive differentiation [11] - Future guidance will be critical for investors, with a focus on revenue generation improvements and cost efficiencies [11]