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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Skillsoft Corp | NYSE:SKIL | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 20.81 | 23 | 08:41:30 |
From Mar 2024 to Mar 2025
Skillsoft Corp. (NYSE: SKIL) (“Skillsoft” or the “Company”), a leading platform for transformative learning experiences, today announced its financial results for the second quarter of fiscal 2025 ended July 31, 2024.
Fiscal 2025 Second Quarter Select Metrics and Financials from Continuing Operations (1)(2)
“Our revenue and adjusted EBITDA performance were in line with our expectations for the quarter," said Ron Hovsepian, Skillsoft’s Executive Chair and Chief Executive Officer. "Our progress on the ‘Fix the Basics’ strategy, including transitioning to a dual business unit structure, already shows improved outcomes. Key leaders have been added, which will further accelerate our efforts. This progress strengthens our foundation for continued profitable growth, unlock shareholder value, and customer success.”
Fiscal 2025 Second Quarter Business Highlights
“I am pleased with the progress we made this quarter towards our longer-term goals to grow at or above market rates in all areas of our business,” said Rich Walker, Skillsoft’s Chief Financial Officer. “Equally important, we remain laser focused on near-term operational execution and are reaffirming our outlook for FY25.”
Full-Year Fiscal 2025 Financial Outlook (2)
The following table reflects Skillsoft’s reaffirmed financial outlook for the fiscal year ending January 31, 2025, based on current market conditions, expectations, and assumptions:
GAAP Revenue
$510 million – $525 million
Adjusted EBITDA
$105 million – $110 million
(1)
Growth calculated relative to the comparable prior year period unless otherwise noted.
(2)
See “Non-GAAP Financial Measures and Key Performance Metrics” below for the definitions of our key operational and non-GAAP metrics and how they are calculated and more information regarding the fact that the Company is unable to reconcile forward-looking non-GAAP measures without unreasonable efforts. We have provided at the back of this release reconciliations of our historical non-GAAP financial measures to the comparable GAAP measures.
Webcast and Conference Call Information
Skillsoft will host a conference call and webcast today at 5:00 p.m. Eastern Time to discuss its financial results. To access the call, dial (877) 413‑9278 from the United States and Canada or (215) 268‑9914 from international locations. The live event can be accessed from the Investor Relations section of Skillsoft’s website at investor.skillsoft.com. A replay will be available for six months.
About Skillsoft
Skillsoft delivers transformative learning experiences that propel organizations and people to grow together. The Company partners with enterprise organizations and serves a global community of learners to prepare today’s employees for tomorrow’s economy. With Skillsoft, customers gain access to blended, multimodal learning experiences that do more than build skills, they grow a more capable, adaptive, and engaged workforce. Through a portfolio of high-quality content, an AI-enabled platform that is personalized and connected to customer needs, and a broad ecosystem of partners, Skillsoft drives continuous growth and performance for employees and their organizations by overcoming critical skills gaps, unlocking human potential, and transforming the workforce. Learn more at www.skillsoft.com.
Non-GAAP Financial Measures and Key Performance Metrics
The Company has organized its business into two segments (or Business Units): Talent Development Solutions (formerly referred to as Content & Platform) and Global Knowledge (formerly referred to as Instructor-Led Training). We track the non-GAAP financial measures and key performance metrics that we believe are key financial measures of our success. Non-GAAP measures and key performance metrics are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures and key performance metrics when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of U.S. GAAP financial disclosures. For example, a company with higher U.S. GAAP net income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, excluding the effects of interest income and expense moderates the impact of a company’s capital structure on its performance. However, non-GAAP measures and key performance metrics have limitations as analytical tools. Because not all companies use identical calculations, our presentation of non-GAAP financial measures and key performance metrics may not be comparable to other similarly titled measures of other companies. They are not presentations made in accordance with U.S. GAAP, are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP. As a result, these performance measures should not be considered in isolation from, or as a substitute analysis for, results of operations as determined in accordance with U.S. GAAP.
We have provided at the back of this press release reconciliations of our historical non-GAAP financial measures to the comparable GAAP measures. We do not reconcile our forward-looking non-GAAP financial measures to the corresponding U.S. GAAP measures, due to variability and difficulty in making accurate forecasts and projections and/or certain information not being ascertainable or accessible; and because not all of the information necessary for a quantitative reconciliation of these forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure is available to us without unreasonable efforts. For the same reasons, we are unable to address the probable significance of the unavailable information. We provide non-GAAP financial measures that we believe will be achieved, however we cannot accurately predict all of the components of the non-GAAP calculations and the U.S. GAAP measures may be materially different than the non-GAAP measures.
We disclose the below non-GAAP financial measures and key performance metrics in this press release because we believe these non-GAAP financial measures and key performance metrics provide meaningful supplemental information.
Dollar retention rate (“DRR”) - For existing customers at the beginning of a given period, DRR represents subscription renewals, upgrades, churn, and downgrades in such period divided by the beginning total renewable base for such customers for such period. Renewals reflect customers who renew their subscription, inclusive of auto-renewals for multi-year contracts, while churn reflects customers who choose to not renew their subscription. Upgrades include orders from customers that purchase additional licenses or content (e.g., a new Leadership and Business module), while downgrades reflect customers electing to decrease the number of licenses or reduce the size of their content package. Upgrades and downgrades also reflect changes in pricing. We use our DRR to measure the long-term value of customer contracts as well as our ability to retain and expand the revenue generated from our existing customers.
Adjusted net income (loss) - Adjusted net income (loss) is defined as GAAP net income (loss) excluding non-cash items, discrete and event-specific costs that do not represent normal, recurring, cash operating expenses necessary for our business operations, and certain accounting income and/or expenses that management believes are necessary to enhance the comparability and are useful in assessing our operating performance, include the following (including the related tax effects):
Adjusted EBITDA - Adjusted EBITDA is defined as adjusted net income (loss) excluding interest expense or income, benefit from or provision for income taxes, depreciation and amortization expense.
Adjusted operating expenses – Adjusted operating expenses are defined as GAAP costs of revenues, content and software development, selling and marketing, and general and administrative expenses, excluding depreciation expense, stock-based compensation expense, system migration costs, transformation costs, and other non-cash charges, as applicable.
Adjusted gross margin – Adjusted gross margin is defined as GAAP revenue less GAAP cost of revenues, excluding stock-based compensation expense and depreciation expense, divided by GAAP revenue for the same period.
Adjusted contribution margin – Adjusted contribution margin is defined as GAAP revenue less adjusted operating expenses, divided by GAAP revenue for the same period.
Free cash flow – Free cash flow is defined as GAAP net cash provided by (used in) operating activities less purchases of property and equipment and internally developed software.
Adjusted free cash flow (levered) – Adjusted free cash flow (levered) is defined as free cash flow plus the cash impact for adjusted EBITDA excluded charges.
Free cash flow conversion – Free cash flow conversion is defined as free cash flow divided by adjusted EBITDA for the same period.
Net leverage – Net leverage is defined as current maturities of long-term debt, plus borrowings under accounts receivable facility, plus long-term debt, less cash and equivalents and restricted cash, divided by adjusted EBITDA for the preceding twelve-month period.
Reclassifications
Certain amounts reported in prior years have been reclassified to conform to the presentation in the current year. These reclassifications had no effect on total assets, total liabilities, total stockholders' equity, or net income (loss) for the prior year.
Cautionary Notes Regarding Forward Looking Statements
This document includes statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created by those laws. All statements, other than statements of historical facts, that address activities, events or developments that we expect or anticipate may occur in the future, including such things as our outlook (including revenue, non-GAAP EBITDA, and free cash flow), our product development and planning, our sales pipeline, future capital expenditures, share repurchases, financial results, the impact of regulatory changes, existing and evolving business strategies and acquisitions and dispositions, demand for our services, competitive strengths, the benefits of new initiatives, growth of our business and operations, and our ability to successfully implement our plans, strategies, objectives, expectations and intentions are forward-looking statements. Also, when we use words such as “may”, “will”, “would”, “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “project”, “forecast”, “seek”, “outlook”, “target”, “goal”, “probably”, or similar expressions, we are making forward-looking statements. Such statements are based upon the current beliefs and expectations of Skillsoft’s management and are subject to significant risks and uncertainties. All forward-looking disclosure is speculative by its nature, and we caution you against unduly relying on these forward-looking statements.
Factors that could cause or contribute to such differences include those described under “Part I - Item 1A. Risk Factors” in our Form 10‑K for the fiscal year ended January 31, 2024. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements included in our other periodic filings with the Securities and Exchange Commission. The forward-looking statements contained in this document represent our estimates only as of the date of this filing and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements, or otherwise.
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included in this document, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved. Annualized, pro forma, projected and estimated numbers are used for illustrative purposes only, are not forecasts and may not reflect actual results. Additionally, statements as to market share, industry data and our market position are based on the most current data available to us and our estimates regarding market position or other industry data included in this document or otherwise discussed by us involve risks and uncertainties and are subject to change based on various factors, including as set forth above.
SKILLSOFT CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares)
July 31, 2024
January 31, 2024
ASSETS
Current assets:
Cash and cash equivalents
$
122,652
$
136,308
Restricted cash
7,491
10,215
Accounts receivable, net of allowance for credit losses of approximately $618 and $562 as of July 31, 2024 and January 31, 2024, respectively
110,042
185,638
Prepaid expenses and other current assets
60,873
53,170
Total current assets
301,058
385,331
Property and equipment, net
4,319
6,639
Goodwill
317,071
317,071
Intangible assets, net
484,294
539,293
Right of use assets
5,336
8,044
Other assets
14,314
17,256
Total assets
$
1,126,392
$
1,273,634
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt
$
6,404
$
6,404
Borrowings under accounts receivable facility
40,406
44,980
Accounts payable
14,072
14,512
Accrued compensation
28,602
31,774
Accrued expenses and other current liabilities
23,724
29,939
Lease liabilities
2,613
3,049
Deferred revenue
226,573
282,570
Total current liabilities
342,394
413,228
Long-term debt
575,364
577,487
Deferred tax liabilities
45,891
52,148
Long-term lease liabilities
7,156
9,251
Deferred revenue - non-current
1,688
2,402
Other long-term liabilities
12,477
13,531
Total long-term liabilities
642,576
654,819
Commitments and contingencies
Shareholders’ equity:
Shareholders’ common stock - Class A common shares, $0.0001 par value: 18,750,000 shares authorized and 8,504,829 shares issued and 8,205,052 shares outstanding at July 31, 2024, and 8,380,436 shares issued and 8,080,659 shares outstanding at January 31, 2024
1
1
Additional paid-in capital
1,556,865
1,551,005
Accumulated equity (deficit)
(1,388,680
)
(1,321,478
)
Treasury stock, at cost - 299,777 shares as of July 31, 2024 and January 31, 2024
(10,891
)
(10,891
)
Accumulated other comprehensive income (loss)
(15,873
)
(13,050
)
Total shareholders’ equity
141,422
205,587
Total liabilities and shareholders’ equity
$
1,126,392
$
1,273,634
SKILLSOFT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Revenues:
Total revenues
$
132,223
$
141,187
$
260,016
$
276,741
Operating expenses:
Costs of revenues
32,471
40,467
66,942
78,291
Content and software development
14,993
17,863
30,499
34,898
Selling and marketing
40,684
40,411
82,976
86,338
General and administrative
19,395
25,085
44,704
50,381
Amortization of intangible assets
31,788
39,221
63,371
77,466
Acquisition and integration related costs
921
937
2,418
2,328
Restructuring
11,299
2,501
12,266
7,719
Total operating expenses
151,551
166,485
303,176
337,421
Operating income (loss)
(19,328
)
(25,298
)
(43,160
)
(60,680
)
Other income (expense), net
(418
)
(934
)
1,799
(1,309
)
Fair value adjustment of warrants
—
793
—
3,645
Fair value adjustment of interest rate swaps
(6,506
)
6,935
1,240
7,205
Interest income
1,045
871
1,973
1,516
Interest expense
(16,415
)
(16,255
)
(32,693
)
(32,191
)
Income (loss) before provision for (benefit from) income taxes
(41,622
)
(33,888
)
(70,841
)
(81,814
)
Provision for (benefit from) income taxes
(2,056
)
(1,889
)
(3,639
)
(6,273
)
Income (loss) from continuing operations
(39,566
)
(31,999
)
(67,202
)
(75,541
)
Gain (loss) on sale of business
—
—
—
(682
)
Net income (loss)
$
(39,566
)
$
(31,999
)
$
(67,202
)
$
(76,223
)
Net income (loss) per share:
Ordinary – Basic and diluted - continuing operations
$
(4.84
)
$
(4.00
)
$
(8.26
)
$
(9.39
)
Ordinary – Basic and diluted - discontinued operations
—
—
—
(0.09
)
Ordinary – Basic and diluted
$
(4.84
)
$
(4.00
)
$
(8.26
)
$
(9.48
)
Weighted average common shares outstanding:
Ordinary – Basic and diluted
8,180
8,005
8,135
8,042
SKILLSOFT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
July 31, 2024
July 31, 2023
Cash flows from operating activities:
Net income (loss)
$
(67,202
)
$
(76,223
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of intangible assets
63,371
77,466
Share-based compensation
6,339
14,955
Depreciation
1,404
2,761
Non-cash interest expense
1,080
1,024
Non-cash property, equipment, software and lease impairment charges
2,293
4,808
Provision for credit loss expense (recovery)
56
4
(Gain) loss on sale of business
—
682
Provision for (benefit from) income taxes – non-cash
(6,271
)
(6,913
)
Fair value adjustment of warrants
—
(3,645
)
Fair value adjustment of interest rate swaps
(1,240
)
(7,205
)
Change in assets and liabilities:
Accounts receivable
75,004
73,172
Prepaid expenses and other current assets, including long-term
(3,016
)
(520
)
Right-of-use assets
1,351
145
Accounts payable
(603
)
(4,241
)
Accrued expenses and other liabilities, including long-term
(9,568
)
(17,379
)
Lease liabilities
(2,539
)
(1,081
)
Deferred revenues
(56,962
)
(55,825
)
Net cash provided by (used in) operating activities
3,497
1,985
Cash flows from investing activities:
Purchase of property and equipment
(399
)
(3,406
)
Internally developed software - capitalized costs
(8,796
)
(5,951
)
Sale of SumTotal, net of cash transferred
—
(5,137
)
Net cash provided by (used in) investing activities
(9,195
)
(14,494
)
Cash flows from financing activities:
Shares repurchased for tax withholding upon vesting of restricted stock-based awards
(479
)
(881
)
Payments to acquire treasury stock
—
(8,046
)
Proceeds from accounts receivable facility, net of borrowings
(4,574
)
399
Principal payments on Term loans
(3,202
)
(3,202
)
Net cash provided by (used in) financing activities
(8,255
)
(11,730
)
Effect of exchange rate changes on cash and cash equivalents
(2,427
)
(472
)
Net increase (decrease) in cash, cash equivalents and restricted cash
(16,380
)
(24,711
)
Cash, cash equivalents and restricted cash, beginning of period
146,523
177,556
Cash, cash equivalents and restricted cash, end of period
$
130,143
$
152,845
Supplemental disclosure of cash flow information:
Cash and cash equivalents
$
122,652
$
147,927
Restricted cash
7,491
4,918
Cash, cash equivalents and restricted cash, end of period
$
130,143
$
152,845
SKILLSOFT CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Revenues
Talent Development Solutions
$
101,652
$
103,188
$
199,727
$
201,761
Global Knowledge
30,571
37,999
60,289
74,980
Total revenues, as reported
$
132,223
$
141,187
$
260,016
$
276,741
Net income (loss), as reported
$
(39,566
)
$
(31,999
)
$
(67,202
)
$
(76,223
)
Acquisition and integration related costs
921
937
2,418
2,328
Restructuring
11,299
2,501
12,266
7,719
Transformation costs
527
323
1,187
1,450
System migration costs
1
403
118
1,070
Stock-based compensation expense
(809
)
5,831
6,339
14,955
Executive exit costs
3,326
—
3,326
—
Fair value adjustment of warrants
—
(793
)
—
(3,645
)
Fair value adjustment of interest rate swaps
6,506
(6,935
)
(1,240
)
(7,205
)
Foreign currency impact
399
1,225
(1,821
)
1,694
Gain (loss) on sale of business
—
—
—
682
Tax impact of adjustments
(2,251
)
(934
)
(2,292
)
(2,319
)
Adjusted net income (loss) from continuing operations
(19,647
)
(29,441
)
(46,901
)
(59,494
)
Interest expense, net
15,370
15,384
30,720
30,675
Expense (benefit from) income taxes, excluding tax impacts above
195
(955
)
(1,347
)
(3,954
)
Depreciation
643
1,219
1,404
2,363
Amortization of intangible assets
31,788
39,221
63,371
77,466
Adjusted EBITDA from continuing operations
$
28,349
$
25,428
$
47,247
$
47,056
Weighted average common shares outstanding:
Ordinary – Basic and diluted
8,180
8,005
8,135
8,042
Ordinary basic and diluted per share information:
Net income (loss), as reported
$
(4.84
)
$
(4.00
)
$
(8.26
)
(9.48
)
Adjusted net income (loss) from continuing operations
$
(2.40
)
$
(3.68
)
$
(5.77
)
$
(7.40
)
Adjusted net income (loss) margin %
(14.9
)%
(20.9
)%
(18.0
)%
(21.5
)%
Interest expense, net
11.6
%
10.9
%
11.8
%
11.1
%
Expense (benefit from) income taxes, excluding tax impacts above
0.1
%
(0.7
)%
(0.5
)%
(1.4
)%
Depreciation
0.5
%
0.9
%
0.5
%
0.9
%
Amortization of intangible assets
24.1
%
27.8
%
24.4
%
28.0
%
Adjusted EBITDA margin %
21.4
%
18.0
%
18.2
%
17.0
%
Adjusted gross margin
75.6
%
71.6
%
74.5
%
72.0
%
Adjusted contribution margin
19.0
%
18.0
%
16.9
%
17.0
%
SKILLSOFT CORP. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - continued (in thousands, unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Operating expenses:
GAAP costs of revenues
$
32,471
$
40,467
$
66,942
$
78,291
Depreciation
(107
)
(182
)
(224
)
(333
)
Stock-based compensation
(132
)
(238
)
(298
)
(335
)
Adjusted costs of revenues
32,232
40,047
66,420
77,623
GAAP content and software development
14,993
17,863
30,499
34,898
Depreciation
(70
)
(141
)
(144
)
(191
)
Stock-based compensation
(914
)
(1,763
)
(2,204
)
(3,775
)
System migration
(1
)
(403
)
(118
)
(1,070
)
Adjusted content and software development
14,008
15,556
28,033
29,862
GAAP selling and marketing
40,684
40,411
82,976
86,338
Depreciation
(162
)
(412
)
(370
)
(679
)
Stock-based compensation
(797
)
667
(2,053
)
(1,014
)
Transformation
(36
)
(106
)
(213
)
(242
)
Adjusted selling and marketing
39,689
40,560
80,340
84,403
GAAP general and administrative
19,395
25,085
44,704
50,381
Depreciation
(304
)
(484
)
(666
)
(1,160
)
Stock-based compensation
2,652
(4,497
)
(1,784
)
(9,831
)
Transformation
(533
)
(508
)
(1,013
)
(1,593
)
Executive exit costs
(3,326
)
—
(3,326
)
—
Adjusted general and administrative
17,884
19,596
37,915
37,797
Total GAAP operating expenses
107,543
123,826
225,121
249,908
Depreciation
(643
)
(1,219
)
(1,404
)
(2,363
)
Stock-based compensation
809
(5,831
)
(6,339
)
(14,955
)
System migration
(1
)
(403
)
(118
)
(1,070
)
Transformation (1)
(569
)
(614
)
(1,226
)
(1,835
)
Executive exit costs
(3,326
)
—
(3,326
)
—
Adjusted total operating expenses
$
103,813
$
115,759
$
212,708
$
229,685
(1)
This line item does not agree to the amounts reflected on preceding table due to certain transformation expenses not being reflected in GAAP operating expenses.
SKILLSOFT CORP.FREE CASH FLOW RECONCILIATION
(in thousands)
Three Months Ended July 31,
Six Months Ended July 31,
2024
2023
2024
2023
Free cash flow reconciliation
Net cash provided by (used in) operating activities
$
(11,440
)
$
(19,479
)
$
3,497
$
1,985
Purchase of property and equipment
(246
)
(1,770
)
(399
)
(3,406
)
Internally developed software - capitalized costs
(4,432
)
(3,268
)
(8,796
)
(5,951
)
Total free cash flow
(16,118
)
(24,517
)
(5,698
)
(7,372
)
Cash impact for adjusted EBITDA excluded charges
4,015
3,097
7,098
7,792
Adjusted free cash flow (levered)
$
(12,103
)
$
(21,420
)
$
1,400
$
420
View source version on businesswire.com: https://www.businesswire.com/news/home/20240909331154/en/
Investors and Media Stephen Poe Investor Relations Investor.relations@skillsoft.com
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