S&P cuts Skillz

S&P said it lowered its ratings for Skillz Inc. and its senior secured notes to CCC+ from B-.

“Skillz's 2022 revenue guidance is materially lower than we previously expected, and we now do not expect the company will be able to achieve breakeven profitability by 2024. The company's total revenue increased 67% in 2021 to $384 million, which was roughly in line with our expectations. However, Skillz's guidance for 2022 calls for only $400 million of total revenue or a roughly 4% rise. This is materially lower than our initial expectation for a 45% improvement when we assigned our B- issuer credit rating in December 2021,” the agency said in a press release.

S&P said it sees Skillz's 2022 cash burn to be about the same or higher than the $183 million of free cash flow losses it suffered in 2021. Skillz issued notes in December and the added interest expense will offset any improvement in EBITDA margin.

The outlook is stable.

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