SKIL Skillsoft Corp

• Raises and tightens fiscal year 2025 revenue outlook
• Continued strong growth in Adjusted EBITDA and margin expansion
• Generated positive free cash flow in the quarter
• Delivering on strategic transformation initiatives laid out at July Investor Day

Skillsoft Corp. (NYSE: SKIL) (“Skillsoft” or the “Company”), a leading platform for transformative learning experiences, today announced its financial results for the third quarter of fiscal 2025 ended October 31, 2024.

Fiscal 2025 Third Quarter Select Metrics and Financials from Continuing Operations (1)(2)

• Total Revenue of $137 million compared to $139 million in the prior year.
• Talent Development Solutions Revenue of $103 million up 2% from the prior year.
• Global Knowledge Revenue of $34 million compared to $38 million in the prior year.
• Net Loss of $24 million compared to net loss of $28 million in the prior year. Net Loss per share of $2.86 compared to net loss per share of $3.45 in the prior year. Adjusted Net Loss of $15 million improved from Adjusted Net Loss of $23 million in the prior year. Adjusted Net Loss per share of $1.82 improved from Adjusted Net Loss per share of $2.82 in the prior year.
• Adjusted EBITDA from continuing operations of $32 million, reflecting a margin of 23% of Revenue, compared to $30 million and a margin of 21% of Revenue in the prior year.
• Gross debt of $591 million at the end of the quarter, down $35 million compared to $626 million in the prior year.
• Ended the quarter with $102 million of cash, cash equivalents, and restricted cash.

“Our fiscal third quarter financial results demonstrate our first step in executing our transformation strategy,” said Ron Hovsepian, Skillsoft’s Executive Chair and Chief Executive Officer. “The operationalization of our strategy is showing the first signs of business and financial improvement for our shareholders and customers.”

Fiscal 2025 Third Quarter Business Highlights

• Skillsoft continues its leadership in AI innovation by launching key learner and organizational tools including AI Coaching Assistant to help leaders develop coaching plans, AI Learning Assistant to personalize the learning experience, and AI Coding Assistant to provide tailored coding exercises and immediate feedback.
• Skillsoft’s organizational platform – Percipio – adds new capabilities in compliance and certifications. Skillsoft’s Compliance Suite is a new offering that aids companies in developing competencies needed to identify and mitigate business risk. Skillsoft’s end-to-end certification paths increase speed to productivity by helping learners attain globally recognized technical certifications.
• Key customer wins were in workforce transformation catalyzed by AI, which led to AI upskilling and global workforce skill measurement generating more than $8 million over multiple years from six global companies.
• “Partner of the Year” was awarded to Skillsoft multiple times as a leader in the interactive learning experience market through Global Knowledge by global vendors including Cisco, CompTIA, Palo Alto Networks, and EC-Council.

“I am pleased with our financial results for the quarter, which are highlighted by strong revenue execution, improved profitability, and positive free cash flow,” said Rich Walker, Skillsoft’s Chief Financial Officer. “Our third quarter performance, coupled with momentum from our transformation execution, gives us confidence to raise and tighten our FY25 revenue guidance range, while reaffirming our adjusted EBITDA outlook.”

Full-Year Fiscal 2025 Financial Outlook (2)

The following table reflects Skillsoft’s updated financial outlook for the fiscal year ending January 31, 2025, based on current market conditions, expectations, and assumptions:

GAAP Revenue

 

 

$520 million – $530 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):

• Acquisition and integration related costs – Costs incurred to effectuate an acquisition, including contingent compensation expenses, and integration related costs.
• Restructuring charges – Charges related to strategic cost saving initiatives, including severance costs, losses associated with the abandonment of right-of-use assets, and contract termination costs.
• Transformation costs – Costs incurred to transform our operations through significant strategic non-ordinary course transactions.
• System migration costs – Costs of temporary resources needed for the migration of content and customers from our legacy system to a global platform.
• Long-term incentive compensation expenses – Charges associated with long-term incentive compensation programs, including stock-based compensation, cash awards tied to stock performance, and awards granted in-lieu of stock that are intended to be settled in cash.
• Executive exit costs – Costs associated with the departure of executives.
• Fair value adjustments – Mark-to-market adjustments of warrants and hedge instruments.
• Foreign currency impact – Unrealized and realized foreign exchange gains or losses due to fluctuations in currency exchange rates.
• (Gain) loss on sale of business - Gain or loss on non-routine sale of business.
• Income from discontinued operations – Income from discontinued operations that do not reflect our current operating performance.
• Impairment charges - Non-cash goodwill, intangible or other asset impairment charges.

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, long-term incentive 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 long-term incentive 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 and per share amounts)

 

 

 

October 31, 2024

 

 

January 31, 2024

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

97,921

 

 

$

136,308

 

Restricted cash

 

 

3,881

 

 

 

10,215

 

Accounts receivable, net of allowance for credit losses of approximately $558 and $562 as of October 31, 2024 and January 31, 2024, respectively

 

 

102,498

 

 

 

185,638

 

Prepaid expenses and other current assets

 

 

55,834

 

 

 

53,170

 

Total current assets

 

 

260,134

 

 

 

385,331

 

Property and equipment, net

 

 

3,543

 

 

 

6,639

 

Goodwill

 

 

317,071

 

 

 

317,071

 

Intangible assets, net

 

 

456,692

 

 

 

539,293

 

Right of use assets

 

 

5,054

 

 

 

8,044

 

Other assets

 

 

11,037

 

 

 

17,256

 

Total assets

 

$

1,053,531

 

 

$

1,273,634

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

6,404

 

 

$

6,404

 

Borrowings under accounts receivable facility

 

 

10,009

 

 

 

44,980

 

Accounts payable

 

 

21,159

 

 

 

14,512

 

Accrued compensation

 

 

28,325

 

 

 

31,774

 

Accrued expenses and other current liabilities

 

 

22,370

 

 

 

29,939

 

Lease liabilities

 

 

2,088

 

 

 

3,049

 

Deferred revenue

 

 

203,646

 

 

 

282,570

 

Total current liabilities

 

 

294,001

 

 

 

413,228

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

574,312

 

 

 

577,487

 

Deferred tax liabilities

 

 

44,099

 

 

 

52,148

 

Long-term lease liabilities

 

 

6,839

 

 

 

9,251

 

Deferred revenue - non-current

 

 

1,823

 

 

 

2,402

 

Other long-term liabilities

 

 

11,977

 

 

 

13,531

 

Total long-term liabilities

 

 

639,050

 

 

 

654,819

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Shareholders’ common stock - Class A common shares, $0.0001 par value: 18,750,000 shares authorized and 8,576,683 shares issued and 8,276,906 shares outstanding at October 31, 2024, and 8,380,436 shares issued and 8,080,659 shares outstanding at January 31, 2024

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

1,559,547

 

 

 

1,551,005

 

Accumulated equity (deficit)

 

 

(1,412,279

)

 

 

(1,321,478

)

Treasury stock, at cost - 299,777 shares as of October 31, 2024 and January 31, 2024

 

 

(10,891

)

 

 

(10,891

)

Accumulated other comprehensive income (loss)

 

 

(15,898

)

 

 

(13,050

)

Total shareholders’ equity

 

 

120,480

 

 

 

205,587

 

Total liabilities and shareholders’ equity

 

$

1,053,531

 

 

$

1,273,634

 

SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

 

 

Three Months Ended October 31,

 

 

Nine Months Ended October 31,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

137,225

 

 

$

138,956

 

 

$

397,241

 

 

$

415,697

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs of revenues

 

 

34,312

 

 

 

36,407

 

 

 

101,254

 

 

 

114,698

 

Content and software development

 

 

14,937

 

 

 

16,126

 

 

 

45,436

 

 

 

51,024

 

Selling and marketing

 

 

39,615

 

 

 

43,983

 

 

 

122,591

 

 

 

130,321

 

General and administrative

 

 

21,686

 

 

 

22,308

 

 

 

66,390

 

 

 

72,689

 

Amortization of intangible assets

 

 

31,826

 

 

 

38,620

 

 

 

95,197

 

 

 

116,086

 

Acquisition and integration related costs

 

 

931

 

 

 

510

 

 

 

3,349

 

 

 

2,838

 

Restructuring

 

 

3,095

 

 

 

873

 

 

 

15,361

 

 

 

8,592

 

Total operating expenses

 

 

146,402

 

 

 

158,827

 

 

 

449,578

 

 

 

496,248

 

Operating income (loss)

 

 

(9,177

)

 

 

(19,871

)

 

 

(52,337

)

 

 

(80,551

)

Other income (expense), net

 

 

(538

)

 

 

19

 

 

 

1,261

 

 

 

(1,290

)

Fair value adjustment of warrants

 

 

—

 

 

 

1,105

 

 

 

—

 

 

 

4,750

 

Fair value adjustment of interest rate swaps

 

 

(822

)

 

 

3,981

 

 

 

418

 

 

 

11,186

 

Interest income

 

 

924

 

 

 

1,060

 

 

 

2,897

 

 

 

2,576

 

Interest expense

 

 

(15,845

)

 

 

(16,492

)

 

 

(48,538

)

 

 

(48,683

)

Income (loss) before provision for (benefit from) income taxes

 

 

(25,458

)

 

 

(30,198

)

 

 

(96,299

)

 

 

(112,012

)

Provision for (benefit from) income taxes

 

 

(1,859

)

 

 

(2,462

)

 

 

(5,498

)

 

 

(8,735

)

Income (loss) from continuing operations

 

 

(23,599

)

 

 

(27,736

)

 

 

(90,801

)

 

 

(103,277

)

Gain (loss) on sale of business

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(682

)

Net income (loss)

 

$

(23,599

)

 

$

(27,736

)

 

$

(90,801

)

 

$

(103,959

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted - continuing operations

 

$

(2.86

)

 

$

(3.45

)

 

$

(11.11

)

 

$

(12.84

)

Basic and diluted - discontinued operations

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(0.08

)

Basic and diluted

 

$

(2.86

)

 

$

(3.45

)

 

$

(11.11

)

 

$

(12.92

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

8,239,564

 

 

 

8,047,497

 

 

 

8,170,344

 

 

 

8,043,712

 

SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

Nine Months Ended

 

 

 

October 31, 2024

 

 

October 31, 2023

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(90,801

)

 

$

(103,959

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

95,197

 

 

 

116,086

 

Stock-based compensation

 

 

9,985

 

 

 

22,917

 

Depreciation

 

 

2,404

 

 

 

2,629

 

Non-cash interest expense

 

 

1,628

 

 

 

1,546

 

Non-cash property, equipment, software and lease impairment charges

 

 

2,495

 

 

 

4,265

 

Provision for credit loss expense (recovery)

 

 

(4

)

 

 

205

 

(Gain) loss on sale of business

 

 

—

 

 

 

682

 

Provision for (benefit from) deferred income taxes – non-cash

 

 

(8,080

)

 

 

(10,270

)

Fair value adjustment of warrants

 

 

—

 

 

 

(4,750

)

Fair value adjustment of interest rate swaps

 

 

(418

)

 

 

(11,186

)

Change in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

82,877

 

 

 

70,645

 

Prepaid expenses and other assets, including long-term

 

 

4,258

 

 

 

2,726

 

Right-of-use assets

 

 

1,632

 

 

 

2,184

 

Accounts payable

 

 

6,693

 

 

 

(3,283

)

Accrued expenses and other liabilities, including long-term

 

 

(12,819

)

 

 

(20,820

)

Lease liabilities

 

 

(3,387

)

 

 

(3,048

)

Deferred revenues

 

 

(79,446

)

 

 

(75,250

)

Net cash provided by (used in) operating activities

 

 

12,214

 

 

 

(8,681

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(820

)

 

 

(3,753

)

Proceeds from sale of property and equipment

 

 

10

 

 

 

—

 

Internally developed software - capitalized costs

 

 

(13,018

)

 

 

(8,055

)

Sale of SumTotal, net of cash transferred

 

 

—

 

 

 

(5,137

)

Net cash provided by (used in) investing activities

 

 

(13,828

)

 

 

(16,945

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Shares repurchased for tax withholding upon vesting of restricted stock-based awards

 

 

(1,052

)

 

 

(1,441

)

Payments to acquire treasury stock

 

 

—

 

 

 

(8,046

)

Proceeds from (payments on) accounts receivable facility

 

 

(34,971

)

 

 

793

 

Principal payments on term loans

 

 

(4,803

)

 

 

(4,803

)

Net cash provided by (used in) financing activities

 

 

(40,826

)

 

 

(13,497

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(2,281

)

 

 

(1,674

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

(44,721

)

 

 

(40,797

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

146,523

 

 

 

177,556

 

Cash, cash equivalents and restricted cash, end of period

 

$

101,802

 

 

$

136,759

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

97,921

 

 

$

129,806

 

Restricted cash

 

 

3,881

 

 

 

6,953

 

Cash, cash equivalents and restricted cash, end of period

 

$

101,802

 

 

$

136,759

 

SKILLSOFT CORP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, unaudited)

 

 

 

Three Months Ended October 31,

 

 

Nine Months Ended October 31,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Talent Development Solutions

 

$

102,998

 

 

$

101,132

 

 

$

302,725

 

 

$

302,893

 

Global Knowledge

 

 

34,227

 

 

 

37,824

 

 

 

94,516

 

 

 

112,804

 

Total revenues, as reported

 

$

137,225

 

 

$

138,956

 

 

$

397,241

 

 

$

415,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss), as reported

 

$

(23,599

)

 

$

(27,736

)

 

$

(90,801

)

 

$

(103,959

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration related costs

 

 

931

 

 

 

510

 

 

 

3,349

 

 

 

2,838

 

Restructuring

 

 

3,095

 

 

 

873

 

 

 

15,361

 

 

 

8,592

 

Transformation costs

 

 

164

 

 

 

1,053

 

 

 

1,351

 

 

 

2,503

 

System migration costs

 

 

—

 

 

 

510

 

 

 

118

 

 

 

1,580

 

Long-term incentive compensation expenses

 

 

4,099

 

 

 

7,962

 

 

 

10,438

 

 

 

22,917

 

Executive exit costs

 

 

—

 

 

 

—

 

 

 

3,326

 

 

 

—

 

Fair value adjustment of warrants

 

 

—

 

 

 

(1,105

)

 

 

—

 

 

 

(4,750

)

Fair value adjustment of interest rate swaps

 

 

822

 

 

 

(3,981

)

 

 

(418

)

 

 

(11,186

)

Foreign currency impact

 

 

524

 

 

 

(181

)

 

 

(1,297

)

 

 

1,513

 

Gain (loss) on sale of business

 

 

—

 

 

 

—

 

 

 

—

 

 

 

682

 

Tax impact of adjustments

 

 

(1,057

)

 

 

(602

)

 

 

(3,349

)

 

 

(2,921

)

Adjusted net income (loss) from continuing operations

 

 

(15,021

)

 

 

(22,697

)

 

 

(61,922

)

 

 

(82,191

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

14,921

 

 

 

15,432

 

 

 

45,641

 

 

 

46,107

 

Expense (benefit from) income taxes, excluding tax impacts above

 

 

(802

)

 

 

(1,860

)

 

 

(2,149

)

 

 

(5,814

)

Depreciation

 

 

1,000

 

 

 

266

 

 

 

2,404

 

 

 

2,629

 

Amortization of intangible assets

 

 

31,826

 

 

 

38,620

 

 

 

95,197

 

 

 

116,086

 

Adjusted EBITDA from continuing operations

 

$

31,924

 

 

$

29,761

 

 

$

79,171

 

 

$

76,817

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

8,239,564

 

 

 

8,047,497

 

 

 

8,170,344

 

 

 

8,043,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted per share information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss), as reported

 

$

(2.86

)

 

$

(3.45

)

 

$

(11.11

)

 

 

(12.92

)

Adjusted net income (loss) from continuing operations

 

$

(1.82

)

 

$

(2.82

)

 

$

(7.58

)

 

$

(10.22

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (loss) margin %

 

 

(10.9

)%

 

 

(16.4

)%

 

 

(15.6

)%

 

 

(19.7

)%

Interest expense, net

 

 

10.9

%

 

 

11.1

%

 

 

11.5

%

 

 

11.1

%

Expense (benefit from) income taxes, excluding tax impacts above

 

 

(0.6

)%

 

 

(1.3

)%

 

 

(0.5

)%

 

 

(1.4

)%

Depreciation

 

 

0.7

%

 

 

0.2

%

 

 

0.6

%

 

 

0.6

%

Amortization of intangible assets

 

 

23.2

%

 

 

27.8

%

 

 

23.9

%

 

 

27.9

%

Adjusted EBITDA margin %

 

 

23.3

%

 

 

21.4

%

 

 

19.9

%

 

 

18.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted gross margin

 

 

75.2

%

 

 

73.9

%

 

 

74.7

%

 

 

72.6

%

Adjusted contribution margin

 

 

23.3

%

 

 

21.4

%

 

 

20.0

%

 

 

18.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SKILLSOFT CORP.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - continued

(in thousands, unaudited)

 

 

 

Three Months Ended October 31,

 

 

Nine Months Ended October 31,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP costs of revenues

 

$

34,312

 

 

$

36,407

 

 

$

101,254

 

 

$

114,698

 

Depreciation

 

 

(91

)

 

 

(80

)

 

 

(315

)

 

 

(413

)

Long-term incentive compensation expenses

 

 

(201

)

 

 

(128

)

 

 

(499

)

 

 

(463

)

Adjusted costs of revenues

 

 

34,020

 

 

 

36,199

 

 

 

100,440

 

 

 

113,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP content and software development

 

 

14,937

 

 

 

16,126

 

 

 

45,436

 

 

 

51,024

 

Depreciation

 

 

(74

)

 

 

22

 

 

 

(218

)

 

 

(169

)

Long-term incentive compensation expenses

 

 

(857

)

 

 

(1,575

)

 

 

(3,061

)

 

 

(5,350

)

System migration

 

 

—

 

 

 

(510

)

 

 

(118

)

 

 

(1,580

)

Adjusted content and software development

 

 

14,006

 

 

 

14,063

 

 

 

42,039

 

 

 

43,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP selling and marketing

 

 

39,615

 

 

 

43,983

 

 

 

122,591

 

 

 

130,321

 

Depreciation

 

 

(161

)

 

 

(160

)

 

 

(531

)

 

 

(839

)

Long-term incentive compensation expenses

 

 

(1,595

)

 

 

(1,421

)

 

 

(3,648

)

 

 

(2,435

)

Transformation

 

 

—

 

 

 

(9

)

 

 

(213

)

 

 

(251

)

Adjusted selling and marketing

 

 

37,859

 

 

 

42,393

 

 

 

118,199

 

 

 

126,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative

 

 

21,686

 

 

 

22,308

 

 

 

66,390

 

 

 

72,689

 

Depreciation

 

 

(674

)

 

 

(48

)

 

 

(1,340

)

 

 

(1,208

)

Long-term incentive compensation expenses

 

 

(1,446

)

 

 

(4,838

)

 

 

(3,230

)

 

 

(14,669

)

Transformation

 

 

(179

)

 

 

(882

)

 

 

(1,192

)

 

 

(2,475

)

Executive exit costs

 

 

—

 

 

 

—

 

 

 

(3,326

)

 

 

—

 

Adjusted general and administrative

 

 

19,387

 

 

 

16,540

 

 

 

57,302

 

 

 

54,337

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total GAAP operating expenses

 

 

110,550

 

 

 

118,824

 

 

 

335,671

 

 

 

368,732

 

Depreciation

 

 

(1,000

)

 

 

(266

)

 

 

(2,404

)

 

 

(2,629

)

Long-term incentive compensation expenses

 

 

(4,099

)

 

 

(7,962

)

 

 

(10,438

)

 

 

(22,917

)

System migration

 

 

—

 

 

 

(510

)

 

 

(118

)

 

 

(1,580

)

Transformation (1)

 

 

(179

)

 

 

(891

)

 

 

(1,405

)

 

 

(2,726

)

Executive exit costs

 

 

—

 

 

 

—

 

 

 

(3,326

)

 

 

—

 

Adjusted total operating expenses

 

$

105,272

 

 

$

109,195

 

 

$

317,980

 

 

$

338,880

 

(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 October 31,

 

 

Nine Months Ended October 31,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Free cash flow reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

$

8,717

 

 

$

(10,666

)

 

$

12,214

 

 

$

(8,681

)

Purchase of property and equipment, net

 

 

(411

)

 

 

(347

)

 

 

(810

)

 

 

(3,753

)

Internally developed software - capitalized costs

 

 

(4,222

)

 

 

(2,104

)

 

 

(13,018

)

 

 

(8,055

)

Total free cash flow

 

 

4,084

 

 

 

(13,117

)

 

 

(1,614

)

 

 

(20,489

)

Cash impact for adjusted EBITDA excluded charges

 

 

10,089

 

 

 

2,306

 

 

 

17,187

 

 

 

10,098

 

Adjusted free cash flow (levered)

 

$

14,173

 

 

$

(10,811

)

 

$

15,573

 

 

$

(10,391

)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241210536898/en/

Investors: Ross Collins or Stephen Poe SKIL@alpha-ir.com

Media: Cameron Martin cameron.martin@skillsoft.com