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As some may know, Skillz Inc. (SKLZ) is a mobile gaming platform that provides app developers with an audience and an opportunity to monetize their games.
However, unlike other platforms, Skillz doesn't rely on strategies such as "pay to win" or advertisements to monetize users. Instead, they allow users to make bets on contests and take a 14% cut of the entry fees with the game developer taking the rest.
Skillz is able to generate strong gross margins because of not having to develop the games itself. This has allowed the company to aggressively reinvest in marketing in order to grow its revenue. Although not currently profitable, its structure allows it to have very high profit and cash flow potential.
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