Moody’s turns Skillz outlook to stable

Moody’s Ratings said it revised its outlook for Skillz Inc. to stable from negative and affirmed the Caa2 ratings on the company and its 10¼% notes due December 2026. The company's speculative grade liquidity rating was downgraded to SGL-3 from SGL-2.

“The stable rating outlook reflects moderating declines in quarterly revenue and operating losses on a year-over-year and sequential basis and Moody's expectation that over the next 12 to 18 months, cash balances will be sufficient to cover narrowing cash flow deficits.

“While reduced user acquisition and engagement spend has led to less users on Skillz's platform, average revenue per paying monthly active user (ARPPU) has increased, payer conversion has remained relatively steady and operating expenses have meaningfully reduced, which should lead to positive adjusted EBITDA in Q4 2024,” Moody’s said in a press release.

The SGL-3 rating indicates adequate liquidity over the next 12-18 months buoyed mostly by sizable unrestricted cash balances totaling $302 million at Dec. 31, down from $362.5 million at FYE 2022, offset by an expectation for continued negative free cash flow over the coming 12 months.

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