Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Skillz (NYSE:SKLZ) and the best and worst performers in the video gaming industry.
Since videogames were invented in the 1970s, they have gradually taken more share of entertainment time. Ubiquitous mobile devices have powered a surge in “snackable” games that can be played on the go. Over time, games have developed more social engagement features where friends can play games together over the internet. The business models of games publishers have become less volatile due to digitization of distribution, in game monetization, and like Hollywood, an increasing dependence on surefire hit franchises. Covid driven lockdowns accelerated adoption and usage of videogames – a trend that has not slowed.
The 4 video gaming stocks we track reported a slower Q2. As a group, revenues beat analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was 2.4% below.
Stocks, especially growth stocks with cash flows further into the future, had a good end of 2023. On the other hand, this year has seen more volatile stock market swings due to mixed inflation data. However, video gaming stocks have held steady amidst all this with share prices up 2.8% on average since the latest earnings results.
Weakest Q2: Skillz (NYSE:SKLZ) Taking a new twist at video gaming, Skillz (NYSE:SKLZ) offers developers a platform to create and distribute mobile games where players can pay fees to compete for cash prizes.
Skillz reported revenues of $25.3 million, down 37% year on year. This print fell short of analysts’ expectations by 4.3%. Overall, it was a disappointing quarter for the company with a decline in its users and a miss of analysts’ user estimates.
“Skillz’ second quarter results mark continued progress against our strategic initiatives to position the company to deliver consistent revenue growth and positive cash flow,” said Andrew Paradise, Skillz’ CEO.
Skillz delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The company reported 122,000 monthly active users, down 37.8% year on year. Unsurprisingly, the stock is down 6.5% since reporting and currently trades at $5.92.
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Best Q2: Roblox (NYSE:RBLX) Best known for its wide assortment of user-generated content, Roblox (NYSE:RBLX) is an online gaming platform and game creation system.
Roblox reported revenues of $893.5 million, up 31.3% year on year, outperforming analysts’ expectations by 1.2%. The business had a strong quarter with solid growth in its users and a decent beat of analysts’ user estimates.
Roblox scored the fastest revenue growth among its peers. The company reported 79.5 million daily active users, up 21.4% year on year. The market seems happy with the results as the stock is up 10.5% since reporting. It currently trades at $45.90.
Take-Two (NASDAQ:TTWO) Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world’s largest video game publishers.
Take-Two reported revenues of $1.34 billion, up 4.2% year on year, exceeding analysts’ expectations by 1.5%. Still, it was a softer quarter as it posted slow revenue growth and full-year revenue guidance missing analysts’ expectations.
Interestingly, the stock is up 9.6% since the results and currently trades at $152.08.
Electronic Arts (NASDAQ:EA) Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ:EA) is one of the world’s largest video game publishers.
Electronic Arts reported revenues of $1.66 billion, down 13.7% year on year. This result beat analysts’ expectations by 5.3%. More broadly, it was a disappointing quarter as it recorded full-year revenue guidance missing analysts’ expectations and slow revenue growth.
The stock is down 2.6% since reporting and currently trades at $145.20.
This content was originally published on Stock Story
