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  "documentTitle": "Skillz, Inc. (SKLZ)",
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  "presentationDate": "2021-03-08 00:00:00",
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  "notes": "This is a research note slide highlighting critical risks regarding customer concentration and declining game performance.",
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      "text": "Third-party app data shows installations of the three games responsible for 88% of SKLZ’s revenues all declined substantially in Q4 2020.",
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      "text": "Third-party user data shows that total installs on SKLZ’s platform were only up 2% year-over-year (“YoY”) in January 2021 and were down -20% YoY in February 2021.",
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      "text": "We spoke to a former Tether employee who independently corroborated our estimates by telling us that, “The top grossing [Tether Studios Skillz] games right now are Solitaire Cube, which is a Klondike solitaire game, and 21 Blitz. That one actually has been trailing off for the past year.”",
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      "text": "Third-party app data shows that installs of 21 Blitz, Solitaire Cube and Blackout Bingo all declined -52%, -40% and -20%, respectively, in Q4 2020. As of March 3, 2021, those games were on track to continue their declines in Q1 2021.",
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      "text": "We found that the three games responsible for 88% of SKLZ’s revenues in the first 9 months of 2020 had all peaked by Q3 2020. Downloads for SKLZ’s full lineup of games began to show overall declines in Q1 2021, while the company has projected 61.4% YoY growth in 1Q21.",
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      "text": "While Blackout Bingo’s viral success masked the other two games’ declines in 2020, hits like these are extremely rare and unpredictable and it exacerbates a critical risk for Skillz – customer concentration. Further, based on download data from January and February 2021, all three of its top games are declining at an increasing rate, and we see nothing in the current data indicating another breakout success.",
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      "text": "Tether Studios is the developer behind the two games that make up 63% of SKLZ’s revenue: Solitaire Cube and 21 Blitz. Based on careful reading of Skillz’s prospectuses, we estimate that revenue from these games declined -5.9% in Q3 2020.",
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      "text": "1. Third-party app data shows installations of the three games responsible for 88% of SKLZ’s revenues all declined substantially in Q4 2020. Q1 2021 is in full freefall showing us that Jan and Feb 2021 YoY are +2% and -20%, respectively:",
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      "text": "2. Skillz relies heavily on three games made by two developers, Tether Studios and Big Run Studios, for 88% of its revenues. We conclude that revenue from Tether’s top two games began contracting in Q3 2020, just as Skillz was preparing to go public via SPAC.",
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      "text": "revenue concentration: 88%",
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      "text": "The top grossing [Tether Studios Skillz] games right now are Solitaire Cube, which is a Klondike solitaire game, and 21 Blitz. That one actually has been trailing off for the past year. — Former Tether employee",
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      "text": "1 S-4, filed 11/17/2020, p. 56\n2 Third party app data – as of March 3, 2021",
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