Let’s dig into the relative performance of Skillz (NYSE: SKLZ) and its peers as we unravel the now-completed Q1 video gaming earnings season.
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 mixed Q1. As a group, revenues beat analysts’ consensus estimates by 4.9% while next quarter’s revenue guidance was 0.8% above.
Luckily, video gaming stocks have performed well with share prices up 11.4% on average since the latest earnings results.
Best Q1: 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 $22.41 million, down 11.2% year on year. This print exceeded analysts’ expectations by 8%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ number of paying monthly active users estimates.
Skillz scored the biggest analyst estimates beat but had the slowest revenue growth of the whole group. The company reported 124,000 monthly active users, up 2.5% year on year. Unsurprisingly, the stock is up 26.9% since reporting and currently trades at $6.70.
Is now the time to buy Skillz? Access our full analysis of the earnings results here, it’s free.
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 $1.90 billion, up 6.5% year on year, outperforming analysts’ expectations by 7.6%. The business had a satisfactory quarter with EPS guidance for next quarter exceeding analysts’ expectations.
Electronic Arts pulled off the highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 1.7% since reporting. It currently trades at $151.95.
Is now the time to buy Electronic Arts? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: 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 $1.58 billion, up 13.1% year on year, exceeding analysts’ expectations by 0.9%. Still, it was a slower quarter as it posted full-year EBITDA guidance missing analysts’ expectations.
Take-Two delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 1.5% since the results and currently trades at $229.08.
Read our full analysis of Take-Two’s results here.
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 $1.04 billion, up 29.2% year on year. This number surpassed analysts’ expectations by 3.3%. Zooming out, it was a slower quarter as it logged full-year EBITDA guidance missing analysts’ expectations.
Roblox achieved the fastest revenue growth among its peers. The company reported 97.8 million daily active users, up 25.9% year on year. The stock is up 21.9% since reporting and currently trades at $81.65.
Read our full, actionable report on Roblox here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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