Core Viewpoint - Skillsoft Corp. reported quarterly earnings of $0.92 per share, significantly beating the Zacks Consensus Estimate of a loss of $2.1 per share, marking an earnings surprise of +143.81% [1] - The company has shown a mixed trend in revenue performance, with revenues of $128.82 million for the quarter, slightly missing the consensus estimate [2] Group 1: Earnings Performance - Skillsoft's earnings of $0.92 per share represent a recovery from a loss of $2.4 per share a year ago [1] - The company has surpassed consensus EPS estimates in all four quarters over the past year [2] Group 2: Revenue Insights - The reported revenue of $128.82 million for the quarter is a decrease from $132.22 million year-over-year [2] - Skillsoft has exceeded consensus revenue estimates three times in the last four quarters [2] Group 3: Stock Performance and Outlook - Skillsoft shares have declined approximately 37.3% year-to-date, contrasting with the S&P 500's gain of 10.4% [3] - The future performance of Skillsoft's stock will largely depend on management's commentary during the earnings call and the subsequent earnings outlook [4][6] Group 4: Earnings Estimates and Industry Context - The current consensus EPS estimate for the upcoming quarter is -$0.96, with expected revenues of $135.92 million, and for the current fiscal year, it is -$2.47 on revenues of $537.14 million [7] - The Technology Services industry, to which Skillsoft belongs, is currently ranked in the top 38% of Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $128.8 million, down $3.4 million or 2.6% year over year [14] - Talent Development Solutions (TDS) revenue was $101.2 million, slightly down year over year [13] - Global Knowledge revenue was $27.6 million, down approximately $2.9 million or 9.6% year over year [14] - Adjusted EBITDA was $28.3 million, flat compared to last year, with an adjusted EBITDA margin of 22% compared to 21.4% last year [16] - GAAP net loss was $23.8 million, compared to a GAAP net loss of $39.6 million in the prior year [16] - Free cash flow for the quarter was negative $22.6 million, compared to negative $16.1 million in the prior year [17] Business Line Data and Key Metrics Changes - TDS LTM dollar retention rate was 99%, unchanged from the previous quarter [14] - The decline in TDS performance was attributed to a decrease in the learner product line, reflecting changes in the B2C market [13] - The TDS Enterprise Solutions segment showed growth for four consecutive quarters, representing more than 90% of the TDS segment [6] Market Data and Key Metrics Changes - Demand in North America and the Middle East was notably softer, impacting Global Knowledge revenue [7] - The macroeconomic and geopolitical headwinds continued to affect revenue, particularly in public sector spending [12] Company Strategy and Development Direction - The company is focused on a transformation plan that includes a dual business unit structure and a new AI innovation-based product roadmap [6] - Strategic investments are being made in go-to-market resources and products, with a focus on enterprise customers [12] - The company aims to evolve its product strategy to emphasize AI-native design and skills intelligence [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged economic uncertainty affecting revenue and updated full-year revenue guidance to $510 million to $530 million [19] - Despite the challenges, management remains confident in the core business's durability and the potential for market growth [11] - The company is monitoring external market conditions and focusing on profitability improvements [19] Other Important Information - The company achieved $45 million in expense reductions, contributing to profitability and margin expansion [7] - The company is expanding global learner support with a unified language experience in over 50 languages [10] Q&A Session Summary Question: Can you provide additional color on sectors impacted by the softer live learning environment? - Management noted that public sector spending in North America and the Middle East was significantly affected, while Europe showed good progress [22][23] Question: Is the softness more macro-driven or competitive? - Management indicated that the softness is primarily macro-driven, with positive bookings in Europe providing confidence [25][26] Question: How does the adjusted revenue guidance reflect bookings and potential further erosion? - The guidance adjustment was based on first-half performance and anticipated seasonality, with a focus on managing risk [28] Question: Is the timeline for returning to growth dependent on macro conditions? - Management believes that while macro conditions have impacted growth, there are still controllable elements that can drive recovery [30][32] Question: How is the dollar retention rate performing, particularly for enterprise customers? - The dollar retention rate was around 99%, with challenges primarily from the North American federal business impacting overall performance [35] Question: How should we frame the magnitude of headwinds faced? - Management indicated that the Global Knowledge segment faces more significant headwinds, while TDS is expected to perform reasonably well [40][41]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $128.8 million, down $3.4 million or 2.6% year-over-year [15] - Adjusted EBITDA was $28.3 million, flat compared to last year, with an adjusted EBITDA margin of 22% compared to 21.4% last year [17] - GAAP net loss was $23.8 million, an improvement from a net loss of $39.6 million in the prior year [17] - Free cash flow for the quarter was negative $22.6 million, compared to negative $16.1 million in the prior year [18] Business Line Data and Key Metrics Changes - Revenue for Talent Development Solutions (TDS) was $101.2 million, slightly down year-over-year [14] - Global Knowledge revenue was $27.6 million, down approximately $2.9 million or 9.6% year-over-year [15] - TDS LTM dollar retention rate was 99%, unchanged from the previous quarter [15] Market Data and Key Metrics Changes - Demand in North America and the Middle East was notably soft, impacting revenue [8] - The public sector was significantly affected by macroeconomic uncertainties, particularly in North America and the Middle East [24][25] Company Strategy and Development Direction - The company is focused on a transformation plan that includes a dual business unit structure and a new AI innovation-based product roadmap [7] - Strategic priorities include leveraging existing platform scale and enhancing customer relationships [8] - The company aims to evolve its product strategy to focus on AI-native design and skills intelligence [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged economic uncertainty affecting revenue and customer discretionary spending [5] - The company is adjusting its full-year revenue guidance to $510 million-$530 million due to anticipated continued softness in federal spending [21] - Management expressed confidence in the core business's durability and the potential for market growth [13] Other Important Information - The company achieved $45 million in expense reductions, contributing to profitability and margin expansion [8] - The company is committed to improving free cash flow, reiterating expectations of $13 million-$18 million for the full year [20] Q&A Session Summary Question: Can you provide additional color on sectors impacted by softer live learning? - Management noted that public sector spending was significantly affected in North America and the Middle East, while Europe showed good progress [24][25] Question: Is the softness more macro-driven or competitive? - Management indicated that the softness is primarily macro-driven, with positive bookings in Europe providing confidence [26][27] Question: How does the adjusted revenue guidance reflect bookings? - The guidance adjustment was based on first-half performance and anticipated seasonality in the second half [30] Question: Is Q2 a trough for the company? - Management suggested that Q2 may represent a trough, particularly for the Global Knowledge segment, while TDS is expected to perform reasonably well [42][43] Question: How will the company maintain profitability amid revenue challenges? - Management emphasized ongoing efficiency assessments and cost management to sustain profitability [48][49]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $128.8 million, down $3.4 million or 2.6% year over year [16] - Talent Development Solutions (TDS) revenue was $101.2 million, slightly down year over year, while Global Knowledge revenue was $27.6 million, down approximately $2.9 million or 9.6% year over year [15][16] - Adjusted EBITDA for the quarter was $28.3 million, flat compared to last year, with an adjusted EBITDA margin of 22% compared to 21.4% last year [18] - GAAP net loss was $23.8 million, an improvement from a loss of $39.6 million in the prior year [18] - Free cash flow for the quarter was negative $22.6 million, compared to negative $16.1 million in the prior year [19] Business Line Data and Key Metrics Changes - TDS LTM dollar retention rate was 99%, unchanged from the previous quarter, but impacted by churn in the federal business [16] - The decline in the learner product line within TDS masked growth in TDS Enterprise Solutions, which represents more than 90% of the TDS segment [15][16] - Global Knowledge continued to experience softening demand, particularly in North America and the Middle East, due to lower discretionary spending [8][16] Market Data and Key Metrics Changes - The macroeconomic and geopolitical headwinds affected demand, particularly in the public sector in North America and the Middle East [8][16] - The company noted a significant impact from slower demand in North America and geopolitical instability in the Middle East [8][16] Company Strategy and Development Direction - The company is focused on a transformation plan that includes a dual business unit structure and a new AI innovation-based product roadmap [6][8] - Strategic priorities include leveraging existing scale and enhancing customer relationships, with a focus on intelligent learning design and immersive learning experiences [8][10] - The company aims to evolve its product strategy to focus on AI-native design and skills intelligence [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged economic uncertainty and its impact on revenue, particularly in the public sector [5][8] - The company is adjusting its full-year revenue guidance to $510 million to $530 million, reflecting anticipated continued softness in federal spending [22] - Despite the challenges, management remains confident in the core business's durability and the strategic investments being made [12][22] Other Important Information - The company has achieved $45 million in expense reductions, contributing to profitability and margin expansion [8] - The company is reiterating expectations for adjusted EBITDA of $112 to $118 million for the full year [22] Q&A Session Summary Question: Can you provide additional color on sectors affected by the softer live learning environment? - Management noted that public sector demand was significantly affected in North America and the Middle East, while Europe showed good progress [25][26] Question: Is the softness more macro-driven or competitive? - Management indicated that the softness is primarily macro-driven, with positive bookings in Europe suggesting a recovery path [27][30] Question: How does the adjusted revenue guidance reflect bookings and potential further erosion? - The guidance adjustment was based on first-half performance and anticipated seasonality, with a focus on managing risk [31][32] Question: Is the timeline for returning to growth dependent on macro conditions? - Management believes that while macro conditions have impacted growth, there are still elements within their control to drive recovery [33][36] Question: How is the company managing costs in light of revenue challenges? - The company is focused on efficiency and has made deliberate cuts to fixed costs, rather than relying solely on variable cost adjustments [50][53]

Financial Performance - Talent Development Solutions revenue was $101.2 million, a decrease of less than 1% year-over-year[26, 30] - Global Knowledge revenue declined by 10% in Q2 '26[30] - Total revenue declined by 3% in Q2 '26[30] - Adjusted EBITDA was $28.3 million, approximately flat compared to the prior year, representing 22% of revenue[26, 35] - Free cash flow was negative $22.6 million, influenced by seasonality and the timing of collections and disbursements[34, 35] - Adjusted operating expenses decreased by 3% year-over-year to $100.5 million[35] Business Highlights - The company achieved a roughly 99% Last-Twelve-Month (LTM) Dollar Retention Rate[26] - The number of technology learners on the Skillsoft platform increased by 50% year-over-year[17] - AI learners increased by 74% and total AI learning hours increased by 158%[17] Strategic Direction - The company is focused on AI-centric product innovation and reshaping its go-to-market strategy[12, 20] - Skillsoft is shifting towards a talent development lifecycle approach, targeting a $400 billion market opportunity[21, 22]

[PART I — FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Skillsoft Corp.'s unaudited condensed consolidated financial statements and notes for periods ended July 31, 2025 and 2024 [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) | Metric | July 31, 2025 (in thousands) | January 31, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Total assets | $969,426 | $1,106,069 | | Total current assets | $252,779 | $332,853 | | Accounts receivable, net | $96,778 | $178,989 | | Deferred revenue | $215,309 | $282,295 | | Total shareholders' equity (deficit) | $42,453 | $93,846 | - Total assets decreased by approximately **$136.6 million** from January 31, 2025, to July 31, 2025, primarily driven by a significant reduction in accounts receivable and deferred revenue[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | | :----------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total revenues | $128,822 | $132,223 | $253,023 | $260,016 | | Operating income (loss) | $(11,830) | $(19,328) | $(30,016) | $(43,160) | | Net income (loss) | $(23,788) | $(39,566) | $(61,837) | $(67,202) | | Basic and diluted EPS | $(2.78) | $(4.84) | $(7.32) | $(8.26) | - Total revenues decreased by **2.6%** for the three months and **2.7%** for the six months ended July 31, 2025, compared to the prior year periods, while net loss significantly improved, decreasing by **39.9%** for the three months and **8.0%** for the six months, reflecting improved operating efficiency[17](index=17&type=chunk) [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income (loss) | $(23,788) | $(39,566) | $(61,837) | $(67,202) | | Foreign currency adjustment, net of tax | $(27) | $64 | $2,946 | $(2,823) | | Total comprehensive income (loss) | $(23,815) | $(39,502) | $(58,891) | $(70,025) | - Total comprehensive loss improved for both the three and six months ended July 31, 2025, compared to the prior year, with a notable positive foreign currency adjustment for the six-month period in 2025[21](index=21&type=chunk) [Unaudited Condensed Consolidated Statements of Shareholders' Equity (Deficit)](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity%20%28Deficit%29) | Metric | January 31, 2025 (in thousands) | July 31, 2025 (in thousands) | | :-------------------------------- | :------------------------------ | :----------------------------- | | Total Shareholders' Equity (Deficit) | $93,846 | $42,453 | | Accumulated (deficit) | $(1,443,386) | $(1,505,223) | | Additional paid-in capital | $1,565,040 | $1,572,538 | | Stock-based compensation (6 months) | N/A | $10,829 | | Net income (loss) (6 months) | N/A | $(61,837) | - Shareholders' equity (deficit) decreased by **$51.4 million** from January 31, 2025, to July 31, 2025, primarily due to the net loss incurred during the period, partially offset by stock-based compensation[29](index=29&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by (used in) operating activities | $13,454 | $3,497 | | Net cash provided by (used in) investing activities | $(9,914) | $(9,195) | | Net cash provided by (used in) financing activities | $(6,533) | $(8,255) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $83 | $(16,380) | | Cash, cash equivalents and restricted cash, end of period | $103,420 | $130,143 | - Net cash provided by operating activities increased significantly to **$13.5 million** for the six months ended July 31, 2025, compared to **$3.5 million** in the prior year, indicating improved operational cash generation[32](index=32&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [(1) Description of Business and Basis of Presentation](index=11&type=section&id=%281%29%20Description%20of%20Business%20and%20Basis%20of%20Presentation) - Skillsoft Corp. operates two reportable segments: Talent Development Solutions (TDS) and Global Knowledge (GK), providing personalized, interactive learning experiences and enterprise-ready solutions[38](index=38&type=chunk) - The company's Class A Common Stock is listed on the New York Stock Exchange under the ticker symbol 'SKIL' since June 14, 2021[38](index=38&type=chunk) [(2) Summary of Significant Accounting Policies](index=11&type=section&id=%282%29%20Summary%20of%20Significant%20Accounting%20Policies) - Skillsoft adopted ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective February 1, 2025, with the impact to be reflected in its fiscal 2026 Form 10-K[44](index=44&type=chunk) - The company is evaluating ASU 2024-03, 'Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,' which will be adopted effective February 1, 2027[46](index=46&type=chunk) [(3) Intangible Assets](index=12&type=section&id=%283%29%20Intangible%20Assets) | Intangible Asset Type | July 31, 2025 Net Carrying Amount (in thousands) | January 31, 2025 Net Carrying Amount (in thousands) | | :-------------------------------- | :--------------------------------------------- | :---------------------------------------------- | | Developed software/courseware | $97,558 | $126,167 | | Customer contracts/relationships | $152,755 | $170,509 | | Trademarks and trade names | $40,409 | $42,217 | | Publishing rights | $7,101 | $11,211 | | Backlog | $286 | $572 | | Skillsoft trademark | $76,545 | $76,545 | | Total intangible assets | $374,654 | $427,221 | - Total net intangible assets decreased by **$52.6 million** from January 31, 2025, to July 31, 2025, primarily due to amortization, while goodwill remained constant at **$317.1 million**[48](index=48&type=chunk)[51](index=51&type=chunk) - Amortization expense for intangible assets was **$63.1 million** for the six months ended July 31, 2025, and no indicators of impairment were found for intangible assets or reporting units[49](index=49&type=chunk)[50](index=50&type=chunk) [(4) Taxes](index=13&type=section&id=%284%29%20Taxes) | Period | Pretax Loss (in thousands) | Tax Benefit (in thousands) | | :-------------------------------- | :------------------------- | :------------------------- | | Three months ended July 31, 2025 | $(24,205) | $(417) | | Six months ended July 31, 2025 | $(63,026) | $(1,189) | | Three months ended July 31, 2024 | $(41,622) | $(2,056) | | Six months ended July 31, 2024 | $(70,841) | $(3,639) | - Skillsoft recorded tax benefits on pretax losses for both periods, with the benefit for the six months ended July 31, 2025, being **$1.2 million**, and is currently evaluating the potential impact of the Tax Reform Act of 2025 (OBBBA) on its financial statements[52](index=52&type=chunk)[54](index=54&type=chunk) [(5) Restructuring](index=13&type=section&id=%285%29%20Restructuring) | Segment | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | | :------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | TDS | $1,613 | $8,883 | $2,629 | $10,014 | | GK | $544 | $2,416 | $874 | $2,252 | | Total | $2,157 | $11,299 | $3,503 | $12,266 | - Total restructuring charges significantly decreased by **80.9%** for the three months and **71.4%** for the six months ended July 31, 2025, compared to the prior year, primarily associated with terminated employees[56](index=56&type=chunk)[57](index=57&type=chunk) - The restructuring liability as of July 31, 2025, was **$2.2 million**, with the majority of planned actions completed, though further evaluations of cost structure may lead to additional actions[58](index=58&type=chunk) [(6) Commitments and Contingencies](index=15&type=section&id=%286%29%20Commitments%20and%20Contingencies) - A derivative lawsuit challenging Skillsoft's acquisition of Codecademy was dismissed on February 7, 2025, and the plaintiff's motion for reargument was denied on March 27, 2025, concluding the matter without liability for Skillsoft[60](index=60&type=chunk) - Management does not anticipate that the outcome of any current legal proceedings or known claims will materially affect Skillsoft's financial position, results of operations, or cash flows, and no material amounts are currently accrued for litigation or indemnifications[61](index=61&type=chunk)[64](index=64&type=chunk) [(7) Long-Term Debt](index=15&type=section&id=%287%29%20Long-Term%20Debt) | Debt Component | July 31, 2025 (in thousands) | January 31, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Current maturities of long-term debt | $6,404 | $6,404 | | Long-term debt (net) | $571,203 | $573,267 | | Total Term Loans outstanding principal | $585,000 | N/A | | Borrowings under A/R facility | $1,000 | $1,000 | | A/R Agreement interest rate | 6.94% | N/A | - Skillsoft's Term Loan Facility has an outstanding principal balance of **$585.0 million** as of July 31, 2025, maturing on July 16, 2028, with an interest rate of SOFR plus a credit premium of **0.11%** and a **5.25%** margin[163](index=163&type=chunk)[159](index=159&type=chunk) - The company has access to a **$75.0 million** Accounts Receivable Facility, with **$1.0 million** drawn and approximately **$35 million** additional available as of July 31, 2025[168](index=168&type=chunk)[169](index=169&type=chunk) [(8) Shareholders' Equity](index=17&type=section&id=%288%29%20Shareholders%27%20Equity) | Metric | July 31, 2025 | | :-------------------------------- | :------------ | | Authorized common stock shares | 18,750,000 | | Issued common stock shares | 8,972,560 | | Outstanding common stock shares | 8,672,783 | | Share repurchase authorization | $10 million | | Shares repurchased under authorization | None | - Skillsoft's Board authorized a **$10 million** share repurchase program on July 10, 2024, terminating on July 11, 2028, but no common stock had been repurchased under this authorization as of July 31, 2025[72](index=72&type=chunk) - Accumulated other comprehensive income (loss) associated with foreign currency translation adjustments was **$(13.972) million** as of July 31, 2025[73](index=73&type=chunk) [(9) Stock-Based Compensation](index=17&type=section&id=%289%29%20Stock-Based%20Compensation) | Metric | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total stock-based compensation expense | $8,087 | $6,339 | | Unrecognized time-based RSU costs | $24,800 | N/A | | Unrecognized MBRSU costs | $200 | N/A | | Unrecognized PBRSU costs | $5,700 | N/A | | Estimated liability for liability-classified awards | $1,683 | N/A | - Total stock-based compensation expense increased to **$8.1 million** for the six months ended July 31, 2025, from **$6.3 million** in the prior year, with significant unrecognized costs remaining for various RSU types[91](index=91&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk)[87](index=87&type=chunk) - The 2020 Omnibus Incentive Plan and the 2024 Employment Inducement Incentive Award Plan govern equity awards, with **271,187** and **206,250** shares remaining available for issuance, respectively, as of July 31, 2025[74](index=74&type=chunk)[76](index=76&type=chunk) [(10) Revenue](index=21&type=section&id=%2810%29%20Revenue) | Revenue Type/Segment | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total revenues | $253,023 | $260,016 | | TDS: SaaS and subscription services | $188,951 | $188,804 | | GK: Virtual, on-demand and classroom | $52,690 | $60,289 | | United States revenue | $165,535 | $173,332 | | Deferred revenue (end of period) | $216,309 | N/A | | Deferred contract acquisition costs (end of period) | $33,177 | N/A | - Total revenues decreased by **2.7%** for the six months ended July 31, 2025, primarily due to a **12.6%** decline in GK segment revenues, while TDS SaaS and subscription services remained relatively stable[96](index=96&type=chunk) - Deferred revenue as of July 31, 2025, was **$216.3 million**, predominantly from time-based SaaS and subscription services billed in advance[99](index=99&type=chunk) [(11) Fair Value Measurements](index=23&type=section&id=%2811%29%20Fair%20Value%20Measurements) | Asset/Liability | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | Cash and cash equivalents | $100,512 | — | — | $100,512 | | Restricted cash | $2,908 | — | — | $2,908 | | Interest rate swaps - asset (liability) | — | $361 | — | $361 | | (Liability)-classified market-based awards | — | $(1,683) | — | $(1,683) | | Total assets (liabilities) recorded at fair value | $103,420 | $(1,322) | — | $102,098 | - Skillsoft recognized a non-cash gain of **$2.1 million** from fair value adjustment of interest rate swaps for the three months ended July 31, 2025, and a non-cash loss of **$(2.1) million** for the six months ended July 31, 2025[105](index=105&type=chunk) - The fair value of Skillsoft's outstanding long-term debt was **$546.6 million** as of July 31, 2025, determined using Level 2 inputs[110](index=110&type=chunk) [(12) Segment Information](index=25&type=section&id=%2812%29%20Segment%20Information) | Segment | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | TDS Revenues | $200,333 | $199,727 | | GK Revenues | $52,690 | $60,289 | | TDS Business unit contribution profit | $139,103 | $137,329 | | GK Business unit contribution profit | $18,570 | $24,349 | | TDS Business unit contribution margin | 69.4% | 68.8% | | GK Business unit contribution margin | 35.2% | 40.4% | - TDS segment revenues increased slightly by **0.3%** for the six months ended July 31, 2025, while GK segment revenues decreased by **12.6%** due to macroeconomic uncertainty and public sector decline[119](index=119&type=chunk)[140](index=140&type=chunk) - TDS business unit contribution profit increased by **1.3%** with a margin improvement of **0.6 percentage points**, whereas GK's contribution profit declined by **23.7%** with a margin decrease of **5.2 percentage points**[119](index=119&type=chunk)[133](index=133&type=chunk) [(13) Net Income (Loss) Per Share](index=27&type=section&id=%2813%29%20Net%20Income%20%28Loss%29%20Per%20Share) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(23,788) | $(39,566) | $(61,837) | $(67,202) | | Basic and diluted EPS | $(2.78) | $(4.84) | $(7.32) | $(8.26) | | Weighted average common shares outstanding | 8,567,973 | 8,180,374 | 8,448,433 | 8,135,353 | - Basic and diluted net loss per share improved to **$(7.32)** for the six months ended July 31, 2025, from **$(8.26)** in the prior year, reflecting a reduced net loss[121](index=121&type=chunk) - Potentially dilutive securities, including warrants, RSUs, and stock options, were not included in the diluted EPS calculation as their effect would be anti-dilutive due to the net losses incurred[122](index=122&type=chunk) [(14) Related Party Transactions](index=29&type=section&id=%2814%29%20Related%20Party%20Transactions) - Skillsoft entered into an agreement in January 2025 to provide off-the-shelf products to Prosus Companies, its largest shareholder, for an aggregate of **$0.8 million** over three years[123](index=123&type=chunk) - The Prosus Commercial Agreement was updated in June 2025 to consolidate and reallocate services, and an additional one-year product agreement for approximately **$69,000** was made in April 2025[123](index=123&type=chunk) [(15) Subsequent Events](index=29&type=section&id=%2815%29%20Subsequent%20Events) - Management concluded that no subsequent events requiring disclosure occurred after the balance sheet date of July 31, 2025, through the filing date of this Form 10-Q[124](index=124&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Skillsoft's financial condition, operations, liquidity, and key accounting estimates for July 31, 2025 and 2024 - Skillsoft empowers organizations and learners with AI-powered, interactive learning experiences, serving over **95 million** learners and **60%** of the Fortune 1000[126](index=126&type=chunk) - The Comprehensive Resource Reallocation Plan (CRRP), announced July 11, 2024, is expected to generate approximately **$45 million** in annualized cost savings, with up to half to be reinvested in strategic growth initiatives[141](index=141&type=chunk) - The company anticipates having sufficient internal and external liquidity to fund operations and anticipated cash needs for at least the next twelve months and the foreseeable future[158](index=158&type=chunk) [General](index=29&type=section&id=General) - Skillsoft leverages AI and a broad ecosystem of partners to deliver personalized, interactive learning experiences, addressing skill gaps, talent retention, and digital transformation for a global community of over **95 million** learners[126](index=126&type=chunk) - The company's unique capabilities include measurable outcomes, technological innovation, blended learning experiences, and enterprise scalability, built to serve the needs of the Global 5000[128](index=128&type=chunk)[129](index=129&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) | Metric (% of Total Revenues) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | 100.0% | 100.0% | 100.0% | 100.0% | | Operating loss | (9.3)% | (14.7)% | (11.9)% | (16.6)% | | Net income (loss) | (18.5)% | (29.9)% | (24.4)% | (25.8)% | - Operating loss as a percentage of total revenues improved from **(14.7)%** to **(9.3)%** for the three months and from **(16.6)%** to **(11.9)%** for the six months ended July 31, 2025, indicating enhanced operational efficiency[130](index=130&type=chunk) - Business unit contribution profit and margin are key non-GAAP financial measures used by the Chief Operating Decision Maker (CODM) to evaluate segment performance and allocate resources[130](index=130&type=chunk) [Revenues](index=33&type=section&id=Revenues) | Revenue Type/Segment | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | Dollar Increase (Decrease) | Percent Change | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------- | :------------- | | TDS Revenues | $200,333 | $199,727 | $606 | 0.3% | | GK Revenues | $52,690 | $60,289 | $(7,599) | (12.6)% | | Total subscription revenues | $188,951 | $188,804 | $147 | 0.1% | | Total non-subscription revenues | $64,072 | $71,212 | $(7,140) | (10.0)% | | Total revenues | $253,023 | $260,016 | $(6,993) | (2.7)% | - TDS segment revenues increased slightly by **0.3%** for the six months ended July 31, 2025, driven by efforts to capitalize on the market shift towards talent development[140](index=140&type=chunk) - GK segment revenues declined by **12.6%** for the six months ended July 31, 2025, primarily due to macroeconomic uncertainty, seasonal patterns, and a continued decline in public sector business[140](index=140&type=chunk) [Operating Expenses](index=34&type=section&id=Operating%20Expenses) | Operating Expense | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | Dollar Increase (Decrease) | Percent Change | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------- | :------------- | | Total operating expenses | $283,039 | $303,176 | $(20,137) | (6.6)% | | Content and software development | $28,419 | $30,499 | $(2,080) | (6.8)% | | Selling and marketing | $79,200 | $82,976 | $(3,776) | (4.6)% | | General and administrative | $42,419 | $44,704 | $(2,285) | (5.1)% | | Restructuring | $3,503 | $12,266 | $(8,763) | (71.4)% | - Total operating expenses decreased by **6.6%** for the six months ended July 31, 2025, largely due to significant reductions in restructuring costs and the impact of the Comprehensive Resource Reallocation Plan (CRRP)[142](index=142&type=chunk)[141](index=141&type=chunk) - Content and software development expenses decreased by **6.8%**, primarily attributable to productivity gains from leveraging AI and the CRRP, while selling and marketing expenses decreased by **4.6%** due to CRRP and reduced branding initiatives[144](index=144&type=chunk)[145](index=145&type=chunk) [Interest and other](index=37&type=section&id=Interest%20and%20other) | Metric | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | Dollar Increase (Decrease) | Percent Change | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------- | :------------- | | Other income (expense), net | $(2,507) | $1,799 | $(4,306) | (239.4)% | | Interest income | $983 | $1,973 | $(990) | (50.2)% | | Interest expense | $(29,358) | $(32,693) | $3,335 | (10.2)% | | Fair value adjustment of interest rate swaps | $(2,128) | $1,240 | $(3,368) | (271.6)% | - Other income (expense), net, saw a significant decrease, primarily due to foreign exchange losses, while interest income decreased by **50.2%** due to lower balances and yields, and interest expense decreased by **10.2%** due to reduced A/R facility borrowings and lower average interest rates[153](index=153&type=chunk) - The fair value adjustment of interest rate swaps resulted in a non-cash loss of **$(2.1) million** for the six months ended July 31, 2025, compared to a gain of **$1.2 million** in the prior year, reflecting changes in the forward-looking yield curve[153](index=153&type=chunk)[154](index=154&type=chunk)[156](index=156&type=chunk) [Provision for (benefit from) income taxes](index=39&type=section&id=Provision%20for%20%28benefit%20from%29%20income%20taxes) | Metric | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | Dollar Increase (Decrease) | Percent Change | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------- | :------------- | | Provision for (benefit from) income taxes | $(1,189) | $(3,639) | $2,450 | (67.3)% | | Effective income tax rate | 1.9% | 5.1% | N/A | N/A | - The tax benefit decreased by **67.3%** for the six months ended July 31, 2025, compared to the prior year, with the effective income tax rate at **1.9%**[157](index=157&type=chunk) - The effective income tax rate differed from the U.S. federal statutory rate of **21.0%** primarily due to non-deductible items, foreign rate differentials, changes in unremitted earnings, and valuation allowance adjustments[157](index=157&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) | Metric | July 31, 2025 (in thousands) | January 31, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Unrestricted cash and cash equivalents | $100,500 | N/A | | Term Loan Facility outstanding principal | $585,000 | N/A | | A/R Agreement drawn amount | $1,000 | $1,000 | | A/R Agreement additional available | $35,000 | N/A | | Share repurchase authorization | $10,000 | N/A | - Skillsoft had **$100.5 million** in unrestricted cash and cash equivalents as of July 31, 2025, and anticipates sufficient liquidity for the next twelve months and foreseeable future through operating cash flow, cash on hand, and the A/R facility[158](index=158&type=chunk) - Net cash provided by operating activities increased by **284.7%** to **$13.5 million** for the six months ended July 31, 2025, primarily due to enhanced working capital efficiency[172](index=172&type=chunk)[173](index=173&type=chunk) [Contractual and Commercial Obligations](index=42&type=section&id=Contractual%20and%20Commercial%20Obligations) | Obligation Type | Total (in thousands) | Remainder of 2026 (in thousands) | 2027-2028 (in thousands) | 2029-2030 (in thousands) | Thereafter (in thousands) | | :-------------------- | :------------------- | :------------------------------- | :----------------------- | :----------------------- | :---------------------- | | Initial Term Loans | $584,995 | $1,601 | $14,409 | $568,985 | — | | Operating leases | $9,127 | $965 | $3,465 | $2,151 | $2,546 | | Total | $594,122 | $2,566 | $17,874 | $571,136 | $2,546 | - The majority of Skillsoft's contractual obligations, totaling **$585.0 million** for Initial Term Loans, are due in the 2029-2030 fiscal years[178](index=178&type=chunk) [Contingencies](index=42&type=section&id=Contingencies) - Skillsoft is subject to litigation in the ordinary course of business and makes accruals for probable and estimable liabilities, with further details provided in Note 6 to the Interim Financial Statements[179](index=179&type=chunk) [Critical Accounting Estimates](index=43&type=section&id=Critical%20Accounting%20Estimates) - Critical accounting estimates involve significant judgment and uncertainty, including revenue recognition, impairment of goodwill and intangible assets, remaining useful lives of capitalized assets, income tax assets and liabilities, and restructuring charges[181](index=181&type=chunk) - The fair value of indefinite-lived trademark intangible assets is determined using the relief-from-royalty method, which relies on significant estimates and assumptions that could materially affect future impairment charges[192](index=192&type=chunk) - Factors that could lead to goodwill and intangible asset impairment include a prolonged period of reporting units' fair value exceeding market capitalization, lower future profitability expectations, and deterioration in key income approach assumptions[194](index=194&type=chunk) [Recently Issued Accounting Pronouncements](index=45&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - Information regarding recently issued accounting pronouncements and their potential impact on Skillsoft's financial statements is detailed in Note 2 to the Interim Financial Statements[197](index=197&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Skillsoft's market risk exposures, including interest rate and foreign currency risks, and management strategies are outlined - A hypothetical **100 basis point** increase or decrease in interest rates would result in approximately **$2.9 million** additional or lower pre-tax annual interest expense on long-term debt[200](index=200&type=chunk) - Skillsoft uses two fixed-rate interest rate swap agreements with a combined notional amount of **$300.0 million** to manage exposure to interest rate risk on variable rate debt[200](index=200&type=chunk) - A hypothetical **10%** increase or decrease in current foreign currency exchange rates would impact annual pre-tax income (loss) by approximately **$2.9 million**, though no hedging arrangements are currently in place for foreign currency risk[203](index=203&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms effective disclosure controls and no material changes in internal control over financial reporting for Q2 2025 - Skillsoft's management, with the participation of its principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective as of July 31, 2025[205](index=205&type=chunk) - There were no material changes in Skillsoft's internal control over financial reporting during the fiscal quarter ended July 31, 2025[206](index=206&type=chunk) - Management acknowledges that any control system has inherent limitations and can provide only reasonable, not absolute, assurance against errors and fraud[207](index=207&type=chunk) [PART II — OTHER INFORMATION](index=47&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings is incorporated by reference from Note 6 – 'Commitments and Contingencies' in the financial statements - Information regarding legal proceedings is incorporated by reference from Note 6 – 'Commitments and Contingencies' in the financial statements[210](index=210&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in Skillsoft's 2025 Annual Report on Form 10-K have occurred - No material changes to the risk factors previously disclosed in Part I, Item 1A of the 2025 Form 10-K have occurred[211](index=211&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported during the period - There were no unregistered sales of equity securities and no use of proceeds to report[212](index=212&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - There were no defaults upon senior securities to report[213](index=213&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to Skillsoft Corp - Mine Safety Disclosures are not applicable to the registrant[214](index=214&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the fiscal quarter ended July 31, 2025 - No director or officer of Skillsoft adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the fiscal quarter ended July 31, 2025[215](index=215&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, agreements, and certifications - The exhibits include the Second Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Warrant Agreement, various offer and letter agreements, and certifications from the Principal Executive and Financial Officers[216](index=216&type=chunk) [SIGNATURES](index=49&type=section&id=SIGNATURES) - The report was duly signed on behalf of Skillsoft Corp. by John Frederick, Chief Financial Officer, on September 9, 2025[220](index=220&type=chunk)

Fiscal 2026 Second Quarter Financial Results Overview [Executive Summary](index=1&type=section&id=executive-summary) Skillsoft achieved Q2 FY26 TDS revenue growth and positive free cash flow, revising full-year guidance due to market softness - Achieved a **fourth consecutive quarter of revenue growth** in the TDS enterprise solution, reinforcing the durability and potential of the core business[4](index=4&type=chunk) - Economic uncertainty continued into Q2, weighing on revenue, primarily due to weaker discretionary demand for live training[4](index=4&type=chunk) - Accelerating execution to reimagine learning, with September announcements introducing AI Innovation based products and a reshaped go-to-market strategy[4](index=4&type=chunk) - Revised full-year revenue guidance range to account for softness in federal and live learning spending[5](index=5&type=chunk) - Generated positive free cash flow year-to-date and remains on track to deliver on adjusted EBITDA and free cash flow targets for the balance of the year[5](index=5&type=chunk) [Fiscal 2026 Second Quarter Select Metrics and Financial Measures](index=1&type=section&id=fiscal-2026-second-quarter-select-metrics-and-financial-measures) Skillsoft reported a 3% year-over-year decrease in total revenue for Q2 FY26, reaching $129 million, with improved GAAP net loss | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Total Revenue | $129 | $132 | -3% | | Talent Development Solutions (TDS) Revenue | $101 | $101 | 0% | | Global Knowledge (GK) Revenue | $28 | $31 | -10% | | GAAP Net Loss | ($24) | ($40) | Improved | | GAAP Net Loss per share | ($2.78) | ($4.84) | Improved | | Adjusted EBITDA | $28 | $28 | 0% | | Adjusted EBITDA Margin | 22% | 21% | +1 pp | | Free Cash Flow (Q2) | ($23) | ($16) | Worsened | | Free Cash Flow (YTD) | $4 | N/A | Positive | [Fiscal 2026 Second Quarter Business Highlights](index=1&type=section&id=fiscal-2026-second-quarter-business-highlights) Key business achievements in Q2 FY26 included positive Free Cash Flow, expanded market reach, and significant growth in technology and AI learners - Achieved positive Free Cash Flow in both the year-to-date and last-twelve-month periods[9](index=9&type=chunk) - Announced availability in AWS Marketplace, simplifying and accelerating the purchasing process[9](index=9&type=chunk) - Expanded reach through partnership with Salesforce to bring Skillsoft CAISY™ agent actions to Agentforce and the Salesforce ecosystem[9](index=9&type=chunk) - Achieved **50% year-over-year increase in technology learners**, **74% increase in AI learners**, and **158% increase in total AI learning hours** on the Skillsoft platform[9](index=9&type=chunk) [Full-Year Fiscal 2026 Financial Outlook](index=1&type=section&id=full-year-fiscal-2026-financial-outlook) Skillsoft revised its full-year fiscal 2026 financial outlook, projecting GAAP Revenue between $510 million and $530 million | Metric | Full-Year Fiscal 2026 Outlook | | :----- | :---------------------------- | | GAAP Revenue | $510 million – $530 million | | Adjusted EBITDA | $112 million – $118 million | [Segment Reporting Changes](index=2&type=section&id=segment-reporting-changes) The company adjusted segment reporting components in Q4 FY25 to enhance transparency and peer comparability - Changes made to segment result components in Q4 FY25 to increase transparency and improve segment comparability to peers[10](index=10&type=chunk) - All prior period comparatives have been recast to conform to the current presentation[10](index=10&type=chunk) Company Information [Webcast and Conference Call Information](index=3&type=section&id=webcast-and-conference-call-information) Skillsoft hosted a conference call and webcast on September 9, 2025, to discuss financial results, with a replay available - Skillsoft hosted a conference call and webcast on September 9, 2025, at 5:00 p.m. Eastern Time to discuss financial results[11](index=11&type=chunk) - A replay of the event will be available for twelve months on the Investor Relations section of Skillsoft's website[11](index=11&type=chunk) [About Skillsoft](index=3&type=section&id=about-skillsoft) Skillsoft empowers organizations and learners with personalized, AI-powered learning experiences to address skill gaps and future-proof workforces - Skillsoft (NYSE: SKIL) empowers organizations and learners with personalized, interactive, AI-powered learning experiences and enterprise-ready solutions[12](index=12&type=chunk) - The platform helps customers solve complex business challenges like bridging skill gaps, improving talent retention, driving digital transformation, and future-proofing the workforce[12](index=12&type=chunk) - Skillsoft is the talent development partner for thousands of organizations, including **60% of the Fortune 1000**, serving over **105 million learners globally**[12](index=12&type=chunk) [Investor and Media Contacts](index=6&type=section&id=investor-and-media-contacts) Contact information for investor relations and media inquiries is provided - Investors can contact Ross Collins or Stephen Poe at SKIL@alpha-ir.com[25](index=25&type=chunk) - Media inquiries can be directed to Cameron Martin at cameron.martin@skillsoft.com[25](index=25&type=chunk) Non-GAAP Financial Measures and Key Performance Metrics [Introduction and Rationale](index=3&type=section&id=introduction-and-rationale) Skillsoft utilizes non-GAAP financial measures and key performance metrics to supplement GAAP information for performance evaluation and comparability - Non-GAAP measures and key performance metrics are used by analysts and investors to evaluate companies and provide insight into U.S. GAAP financial disclosures[13](index=13&type=chunk) - Management uses these measures to assess operating performance, financial leverage, resource allocation, and to provide normalized period-to-period comparisons[13](index=13&type=chunk) - Non-GAAP measures have limitations as analytical tools, are not GAAP presentations, and should not be considered alternatives to GAAP profit/loss or operating cash flows[13](index=13&type=chunk) - Quantitative reconciliations for forward-looking non-GAAP financial measures are not provided due to variability and difficulty in making accurate forecasts[15](index=15&type=chunk) [Key Performance Metric: Dollar Retention Rate (DRR)](index=3&type=section&id=key-performance-metric-dollar-retention-rate-drr) Dollar Retention Rate (DRR) measures the long-term value of customer contracts and the ability to retain and expand revenue from existing customers - DRR represents subscription renewals, upgrades, churn, and downgrades for existing customers divided by their beginning total renewable base[16](index=16&type=chunk) - DRR is used to measure the long-term value of customer contracts and the ability to retain and expand revenue from existing customers[17](index=17&type=chunk) [Non-GAAP Financial Measure Definitions](index=4&type=section&id=non-gaap-financial-measure-definitions) This section defines various non-GAAP financial measures used by Skillsoft, primarily excluding non-cash and discrete items for enhanced comparability [Adjusted Net Income (Loss)](index=4&type=section&id=adjusted-net-income-loss) Adjusted net income (loss) excludes non-cash items, discrete and event-specific costs, and certain accounting income/expenses - Adjusted net income (loss) excludes non-cash items, discrete and event-specific costs not representing normal cash operating expenses, and certain accounting income/expenses[18](index=18&type=chunk) - Exclusions include impairment charges, amortization of acquired intangible assets, acquisition and integration related costs, restructuring charges, transformation costs, system migration costs, long-term incentive compensation expenses, executive exit costs, fair value adjustments, and other (income) expense, net[18](index=18&type=chunk) [Adjusted EBITDA](index=5&type=section&id=adjusted-ebitda) Adjusted EBITDA is defined as net income (loss) with specific exclusions, including amortization, depreciation, and income taxes - Adjusted EBITDA is defined as net income (loss) excluding the same items as adjusted net income (loss), plus additional exclusions[19](index=19&type=chunk) - Additional exclusions for Adjusted EBITDA are amortization of intangible assets (other than those recognized as part of business combination accounting), depreciation expense, and provision for (benefit from) income taxes[19](index=19&type=chunk) [Other Adjusted Operating Measures](index=5&type=section&id=other-adjusted-operating-measures) This section defines other adjusted operating measures including adjusted total operating expenses, free cash flow, and adjusted net leverage - Adjusted total operating expenses exclude depreciation, long-term incentive compensation, system migration, and transformation costs[19](index=19&type=chunk) - Free cash flow is defined as net cash provided by (used in) operating activities less net purchases of property and equipment and internally developed software[19](index=19&type=chunk) - Adjusted 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[19](index=19&type=chunk) Unaudited Condensed Consolidated Financial Statements [Balance Sheets](index=7&type=section&id=balance-sheets) As of July 31, 2025, Skillsoft reported total assets of $969.4 million, with a decrease in total liabilities and shareholders' equity | Metric (in thousands) | July 31, 2025 | January 31, 2025 | Change | | :-------------------- | :------------ | :--------------- | :----- | | Total assets | $969,426 | $1,106,069 | ($136,643) | | Total liabilities | $927,000 | $1,012,223 | ($85,223) | | Total shareholders' equity (deficit) | $42,453 | $93,846 | ($51,393) | | Accounts receivable, net | $96,778 | $178,989 | ($82,211) | | Deferred revenue (current

Key Takeaways Skillsoft will release 2Q26 results on Sept. 9, after market close.Revenues are estimated at $129.2M, suggesting a 2.3% y/y decline.Talent Development Solutions may grow on AI capabilities and product launches.Skillsoft (SKIL) is scheduled to release second-quarter fiscal 2026 results on Sept. 9, after market close.The company surpassed the Zacks Consensus Estimate in the four trailing quarters. It delivered an earnings surprise of 93.8%, on average.SKIL’s Q2 ExpectationsThe Zacks Consensus Es ...

Industry Overview - The Technology Services industry ranks within the top 40% of Zacks Ranked Industries and is expected to outperform the market over the next three to six months [1][8] - The industry is mature with strong demand for services, leading to significant growth in the first half of 2025, which is likely to continue in the second half [1][3] Market Trends - The global shift toward digitization is creating opportunities in markets such as 5G, blockchain, and artificial intelligence (AI) [3] - Companies are rapidly adopting generative AI, machine learning (ML), and data science to gain competitive advantages [3][4] - There is robust demand for multi-cloud-enabled software solutions as businesses transition from legacy platforms to modern cloud-based infrastructure [3] Company Highlights Coherent Corp. (COHR) - Coherent is positioned in the industrial, communications, electronics, and instrumentation markets, offering diversified applications [7] - Expected revenue and earnings growth rates for the current year are 11.5% and 29.3%, respectively, with a 4.1% improvement in the Zacks Consensus Estimate for current-year earnings over the last 30 days [9] Vimeo Inc. (VMEO) - Vimeo provides cloud-based video software solutions, including video hosting, management, and analytics [10][11] - Expected revenue and earnings growth rates for the next year are 6.2% and over 100%, respectively, with no change in the Zacks Consensus Estimate for next-year earnings over the last 60 days [12] Skillsoft Corp. (SKIL) - Skillsoft offers personalized learning experiences and operates in two segments: Talent Development Solutions and Global Knowledge [13][14] - Expected revenue and earnings growth rates for the current year are 1.2% and -157%, respectively, with a 54.8% improvement in the Zacks Consensus Estimate for current-year earnings over the last 60 days [15] Vontier Corp. (VNT) - Vontier focuses on transportation and mobility solutions, operating through three segments: Mobility Technologies, Repair Solutions, and Environmental and Fueling Solutions [16] - Expected revenue and earnings growth rates for the current year are 0.1% and 9%, respectively, with a 2.9% improvement in the Zacks Consensus Estimate for current-year earnings over the last seven days [17] SPX Technologies Inc. (SPXC) - SPX Technologies is a diversified supplier in the HVAC and detection and measurement markets, operating in two segments [18] - Expected revenue and earnings growth rates for the current year are 12.7% and 17%, respectively, with a 3.2% improvement in the Zacks Consensus Estimate for current-year earnings over the last seven days [19]

Core Viewpoint - Skillsoft Corp. (SKIL) has experienced significant selling pressure, resulting in a 30.2% decline over the past four weeks, but analysts anticipate better earnings than previously expected, indicating a potential turnaround for the stock [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is utilized to determine if a stock is oversold, with readings below 30 indicating oversold conditions [2]. - SKIL's current RSI reading is 28.35, suggesting that the heavy selling may be exhausting itself and a trend reversal could be imminent [5]. Group 2: Fundamental Indicators - There has been a strong consensus among sell-side analysts to raise earnings estimates for SKIL, leading to a 52.8% increase in the consensus EPS estimate over the last 30 days [7]. - An upward trend in earnings estimate revisions typically correlates with price appreciation in the near term [7]. Group 3: Analyst Ratings - SKIL holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [8].