Skillsoft Corp. (NYSE:SKIL) is a leading platform for 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.

Business Overview

Skillsoft operates in two main business segments - Content & Platform and Instructor-Led Training. The Content & Platform segment engages in the sale, marketing, and delivery of the company's content learning solutions in areas such as Leadership and Business, Technology and Developer, and Compliance. This includes individualized coaching as well as technical skill areas assumed in the Codecademy acquisition. The Instructor-Led Training segment offers training solutions covering information technology and business skills for corporations and their employees.

Skillsoft's comprehensive suite of premium, original, and authorized partner content features one of the deepest libraries of leadership, business, technology, and compliance curricula. With access to a broad spectrum of learning options (including video, audio, books, bootcamps, live events, and practice labs), organizations can meaningfully increase learner engagement and retention. Content & Platform offerings are predominantly delivered through Percipio, Skillsoft's award-winning, AI-driven, immersive learning platform.

The Instructor-Led Training business offers a wide breadth of training topics and delivery modalities both on a transactional and subscription basis, guiding customers throughout their lifelong technology learning journey. This includes authorized content from various partners aimed at providing professional certifications for individuals that successfully complete all requirements.

Financials

For the fiscal year ended January 31, 2024, Skillsoft reported annual revenue of $553,237,000, annual net income of -$349,285,000, annual operating cash flow of $2,818,000, and annual free cash flow of -$15,085,000.

In the first quarter of fiscal 2025, which ended on April 30, 2024, the company reported total revenue of $127,793,000, a 6% decrease compared to the prior year period. Content & Platform revenue was $98,075,000, roughly flat year-over-year, while Instructor-Led Training revenue declined 20% to $29,718,000.

The decrease in total revenue was primarily due to the impact of tighter budgets on some of Skillsoft's larger in-quarter renewals and upgrades, as well as softer consumer subscription performance in the Instructor-Led Training segment. The company's dollar-based retention rate in the Content & Platform segment was approximately 99% in the quarter, compared to 101% in the prior year period.

On the profitability front, Skillsoft reported an Adjusted EBITDA of $19 million, or 15% of revenue, in Q1 2025, compared to $22 million, or 16% of revenue, in the same period last year. GAAP net loss was $28 million, an improvement from the $44 million net loss in Q1 2024.

Geographic Performance

Skillsoft generates revenue across various geographic regions, with the United States accounting for the largest portion at $84,948,000, or 66% of total revenue, in Q1 2025. Europe, Middle East, and Africa contributed $31,345,000 (25%), Other Americas $6,351,000 (5%), and Asia-Pacific $5,149,000 (4%) in the quarter.

The company has seen good expansion and growth in the Asian markets it has focused on, while Europe has continued to show the right trajectory. However, the Instructor-Led Training segment has been consistently negative in Europe, which the company is working to address through operational improvements.

Liquidity

Skillsoft ended the first quarter of fiscal 2025 with $142,020,000 in cash and cash equivalents, and $7,584,000 in restricted cash, for a total of $149,604,000 in cash and cash equivalents. The company also has access to up to $75,000,000 of borrowings under its accounts receivable facility.

Total net debt, which includes borrowings on the term loan and accounts receivable facility, net of cash and cash equivalents, was approximately $476,000,000 as of April 30, 2024, down from $482,000,000 at the end of the prior quarter.

Skillsoft generated $14,937,000 in cash flow from operations and $10,267,000 in free cash flow during the first quarter of fiscal 2025. The company's cash flow performance was driven by solid cash collections against prior periods' accounts receivables.

Outlook

For the full fiscal year 2025, Skillsoft is reaffirming its previously provided guidance, which calls for revenue in the range of $530 million to $550 million and Adjusted EBITDA of $105 million to $110 million.

While the company's first quarter financial results fell short of internal expectations, Skillsoft believes the actions it is taking to strengthen its execution and enhance its financial results will allow it to deliver on its full-year outlook. The leadership team is committed to ensuring the company is positioned to win in the market, deliver profitable and efficient growth, and generate value for stakeholders.

Risks and Challenges

Skillsoft operates in a highly competitive and rapidly evolving market for enterprise learning solutions. The company faces risks from potential changes in customer preferences, technological advancements, and the ability to attract and retain top talent. Additionally, macroeconomic factors such as budget pressures and economic uncertainty could impact demand for the company's offerings.

The Instructor-Led Training segment has been a particular area of challenge, with weaker demand trends and execution issues. Skillsoft is working to address these challenges through operational improvements, including changes to its marketing approach and a focus on improving fill rates for virtual and in-person training sessions.

Conclusion

Skillsoft is a leading provider of transformative learning experiences that enable organizations to build a future-fit workforce. While the company faced some execution challenges in the first quarter, the leadership team is taking decisive action to strengthen the business and position Skillsoft for long-term success.

With a comprehensive suite of content, a personalized and AI-driven learning platform, and a broad ecosystem of partners, Skillsoft is well-positioned to capitalize on the growing demand for upskilling and reskilling in the rapidly evolving world of work. As the company continues to refine its strategy and operational execution, investors should closely monitor Skillsoft's progress in driving profitable growth and enhancing shareholder value.